The Covid-19 pandemic has made people uncomfortable in more ways than one:
- The discomfort of home confinement.
- The discomfort of wearing masks in public.
- The discomfort of financial uncertainty.
The financial uncertainty is what I would like to touch upon.
Financial disasters tend to wreak havoc on people’s comfort levels. Many lose their jobs, many watch their investment portfolios evaporate with many experiencing both.
While many people are thrust into uncomfortable personal and financial situations in the face of social and economic disaster, there’s a segment of our society that was prepared. They had already changed their investment outlook to avoid the very type of uncomfortable situations I’ve talked about here.
Savvy investors who have been unfazed by the most recent turmoil wrought by Covid-19 were probably once, as many of the broader public now, staring down the barrel of unemployment, foreclosure, and bankruptcy.
But these investors learned from the last disaster and pivoted their investment strategy.
Not only did they turn to alternative assets to avoid the discomfort of the Wall Street roller coaster, but they turned their attention to industries that thrived in uncertain times.
Just as savvy investors turn to investments designed to provide comfort in turbulent times by ensuring secure cash flow insulated from Wall Street, the buying public also turns to products and services that provide comfort – alcohol and cigarettes come first to mind. But there are less guilty pleasures I’ll talk about later.
Savvy investors will pay attention to what products will continue to thrive in a downturn.
They will invest in demand. While consumers will reduce spending in luxuries, there are necessities that they will and can not give up.
It’s no wonder that food production – especially the demand for comfort food – has recently seen an uptick. This makes perfect sense since food is not a luxury but a necessity.
The two products with the most loyal followings are coffee and cacao (chocolate). Coffee and chocolate have rabid fans, and these consumers will not give up foods that are part of their daily routines.
Comfort food is often the cheapest alternative for finding solace amid an economic and social storm. Many with depleted resources who are prevented from more expensive entertainment and dining options – going to movies, eating out, going on trips, etc. – often turn to more affordable alternatives like comfort food to get through the dark times.
So where do savvy investors look to invest?
They invest in comfort food, such as coffee and cacao. They wrap this investment strategy into their overall investment strategy of focusing on alternative assets that cash flow and appreciate – backed by a tangible asset.
So while the consuming public may spend less on luxuries like vacations, cars, and consumer electronics, life’s little luxuries: like comfort food, such as chocolate and coffee, are recession-proof.
The demand for these foods increase – just like the demand for alcohol and cigarettes spike in a recession – but without the guilt.
Investing in a recession-proof industry through an alternative investment vehicle that provides recession-insulated cash flow with appreciation and backed by an asset with intrinsic value is exactly the type of investment investors should be seeking to avoid the economic discomfort of future economic disasters.
Abundant opportunities for investing in private investments that provide a secure income stream in a recession-proof consumer good like comfort foods might be just the ticket for many investors for ensuring comfort in future uncomfortable situations.