Key insights
- The author discusses sectors and companies that may be resilient during geopolitical instability and potential recession. They highlight businesses with consistent demand, such as insurance, cybersecurity, and infrastructure software, which act as 'toll booths' collecting fees regardless of market conditions. While a recession would slow growth, these sectors are expected to be more resistant than others. This suggests a slightly bullish outlook for companies in these sectors relative to the broader market.
Not interested in the fear mongering, but with everything going on it's worth thinking about strategically. There have always been winners and losers through every cycle - dot com, 2008, covid, and now this. Some companies push through regardless and come out stronger on the other side.
The obvious ones people point to are defense, healthcare, logistics, energy. But I'm curious what's less obvious. What about infrastructure software? Waste management? Insurance services that collect fees regardless of market direction?
I keep coming back to businesses that are essentially toll booths - they collect a cut of transactions that happen no matter what. People still need to insure their homes, businesses still need payroll, companies still need cybersecurity. The underlying demand doesn't disappear because of geopolitical chaos.
That said, recession would slow everything down eventually. New home purchases, new business formation, consumer spending - all of it pulls back. So "resilient" doesn't mean "immune."
What factors do you all consider when thinking about companies that can push through? Anyone specifically repositioning right now? What names are you looking at that you think hold up regardless?