06 Mar The Pandemic Portfolio

Since stocks peaked on February 19^th, the S&P500 has plunged over 10% even after some big up days in the middle of it.

We decided to try and put together a portfolio of stocks that could be used as a defensive move to enable you to stay invested through this pullback. Timing an exit and then re-entry is almost impossible so it is often better to just stay invested but change which stocks you are invested in.

For, if you can stay invested then you will definitely catch the recovery whenever that happens to be.

The professionals call this portfolio rebalancing.

Let’s take a look at what we could use to rebalance our portfolios.

To weather a global pandemic then the first place to look would be healthcare. We like Regeneron (REGN) and Gilead (GILD) in this space.  Risk averse sectors are gold and energy and we like Newmont (NEM) and Eversource (ES) for this.

Food will always be needed, especially long-life products, so enter Campbell Soup (CPB) and Kroger (KR), both of which could benefit from panic buying of supplies as well as a solid inverse correlation to plunging interest rates.

That leaves two other kinds of stocks. Cleaning products, Clorox (CLX) and financial exchanges as all this volatility in stock prices is generating large revenues for them so add in CME Group (CME) and Intercontinental Exchange (ICE)

Here are the individual results since the high of the S&P500 on February 19th to yesterday March 5th.

Regeneron Pharma         REGN                    +21.80%

Gilead Sciences                 GILD                      +13.04%

Newmont Gold                 NEM                      +12.80%

Eversource                         ES                           +3.33%

Campbell Soup                  CPB                        +11.11%

Kroger                                  KR                           +13.30%

Clorox                                   CLX                         +6.68%

CME Group                         CME                       +6.90%

Intercontinental Ex          ICE                          +2.61%

That is an average gain of 10.21% in a time when the S&P500 has fallen over 10%. Not a bad result at all

But are these stocks just good when there is a global pandemic or can they weather all conditions?

To determine this we ran a test that said, what if we bought these stocks a year ago? How would the portfolio have performed?

The answer is very well, better even than we expected, stronger even than the market as a whole even before the pandemic broke the S&P500

The author does not hold an investment in the company mentioned and has not been renumerated for this report