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Bear Market Winners

With recession fears mounting, we look back in time to see which industries topped the charts in previous market downturns.

Mark Twain said that ‘history doesn’t repeat itself, but it often rhymes’. With fears of a recession mounting, what can we learn from patterns of the past? It’s a great time to look at the last two major market downturns and which industries bucked the trend on Wall St. The crashes we’ll review are the Global Financial Crisis (GFC) and the Dot-Com Bubble.

The GFC caused the S&P 500 to lose 37% in 2008 – and that’s considering the crisis only really took hold in the second half of that year. Despite the common belief that the entire market crashed during the early stage of the GFC, that’s not the case. If we look at the top ten performing companies during 2008 on Wall St, discount retailers stood out: Dollar General ($DG) gained 61%, and Walmart ($WMT) gained 18%. Bringing this insight into 2022, while the S&P 500 has plummeted 20% over the last six months, Walmart has only declined 13%, and Dollar General has actually gained 7%.

Going further back, the Dot-Com Bubble burst began in 2000 and was intensified in the wake of September 11, 2001. But the market’s worst year was 2002, with the S&P 500 dropping 22%. The industry that was the light through the dark in 2002 was clearly manufacturing, with three of the top five performers fitting this category. Crown Cork & Seal ($CCK) topped the list, returning 156% in capital gains to shareholders. The company manufactures metal beverage and food cans, aerosol metal containers, metal closures and specialty packing. Compared to the S&P 500’s 20% decline over the first half of 2022, Crown has declined 14%.

The key takeaway is that, no matter how dire the market might seem, there are always winners to be found.

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When you invest, your capital is at risk.