Invest in Consumer Staples

Even during recessions, consumers need to buy food, drugs, hygiene products, and medical supplies. These are consumer staples that are the last items to be cut from the family budget. So while companies selling flat-screen TVs and other discretionary products experience drops in revenue, companies selling food products and personal necessities do not.

Data shows that these types of companies outperformed the S&P 500 during the last five recessionary periods. Consumer staple companies include Johnson & Johnson, Procter & Gamble, Conagra, and Wal-Mart. These particular companies also pay good dividends, which strengthens their defensive profile. There are also mutual funds that invest strictly in consumer staple companies. The Fidelity Select Consumer Staples Portfolio invests a minimum of 80% of its assets in companies engaged in the manufacture, sale, or distribution of consumer staples.