But once the economy slows in earnest, demand quickly drops and these companies typically walk off a cliff. Then, Wall Street tends to favor dividend-paying stocks, such as utilities, because a dividend tends to cushion a fall in a stock's price. At the moment, California's utility problems have poisoned utilities. But, since winter typically ends every March, and because these crises tend to resolve themselves, utilities might be an interesting play now. Bank stocks, too, typically fare well when a recession begins, thanks to falling interest rates.
Banks make money by borrowing at low rates and lending at higher rates.
That's why they lower the rates they pay for deposits much faster than they raise them. Toward the end of a recession, borrowers start defaulting on loans, and bank stocks tend to crumble. As I recall, Gillette was one of the few Boston companies that survived the Great Depression. Coke, however, is wildly overpriced at 76 times earnings, and Gillette is 46 times earnings. I have an IRA I am thinking of moving into this type bond.