• Rising stagflation risk, marked by slow growth and high inflation, threatens traditional investment portfolios.
• Defensive assets and stagflation standout stocks may offer portfolio protection during economic uncertainty.
• Key sectors for stagflation include consumer staples, healthcare, and utilities, alongside gold as an inflation hedge.
• These companies provide essential goods and services, offering stable revenue and pricing power in tough economic times.

A Defensive Playbook for Potentially Stagnant Times

I don’t know about you, but the current economic mood feels a bit like a dreary Sunday afternoon. The forecast is grim, the good times seem a distant memory, and there’s a nagging feeling that we’re in for a long, grey slog. The word on everyone’s lips, whispered in hushed tones, is stagflation. It’s that ghastly cocktail of a stalled economy mixed with stubbornly high prices, and it’s a recipe for a nasty portfolio hangover.

While the broader market has been stumbling around like a man who’s lost his keys, a quiet corner has been holding up rather well. Defensive assets, the sort of investments your grandfather would approve of, have actually nudged upwards. It’s not a coincidence. It’s what happens when smart money starts preparing for rain.

The Warning Signs Are Hard to Ignore

Let’s be frank. When the people in charge of the money supply, the US Federal Reserve, start lowering their growth forecasts while simultaneously admitting inflation is stickier than jam on a wool blanket, you ought to pay attention. This is the very definition of a stagflationary environment. The economy loses its puff, but the cost of everything keeps climbing.

For the average investor, this is a proper pickle. The go-go growth stocks that did so well for so long tend to suffer when the economy slows down. Meanwhile, bonds, the traditional safe harbour, get battered by inflation. So, where does one turn? To me, the answer lies in the boring, the essential, and the unglamorous. It lies in the companies that provide things we simply cannot do without.

In Search of a Sturdy Shelter

When the economic weather turns foul, you don’t need a flashy sports car, you need a reliable Land Rover. The same logic applies to investing. This is where a collection of carefully chosen assets, like the Stagflation Standouts, could come into its own. The strategy is simple. It focuses on businesses and assets that have historically shown resilience when things get tough.

Take gold, for instance. It’s the ultimate old-school asset. It pays no dividend and it doesn’t innovate. But what it does do, and has done for centuries, is act as a store of value when paper money is losing its worth. During the last great stagflationary panic in the 1970s, gold’s performance was nothing short of spectacular. While history never repeats itself exactly, it often rhymes.

Then you have the giants of necessity, companies like Costco and Walmart. These aren’t exciting tech start-ups. They are vast, efficient machines for selling people things they need, day in and day out. When household budgets get squeezed, people don’t stop buying groceries, they just get smarter about where they buy them. They flock to bulk-buy warehouses and discount retailers. These companies have what analysts call ‘pricing power’, which is a fancy way of saying they can pass on rising costs without losing their customers. It’s a vital trait in an inflationary world.

A Necessary Dose of Realism

Now, I must be clear. This is not a risk-free proposition. There is no such thing in investing. These defensive companies face their own headwinds, and gold can be volatile. Furthermore, the entire stagflation scenario might not play out. The economy could surprise us all and come roaring back to life. In that case, these sturdy, defensive plays would likely underperform their more glamorous, growth-oriented cousins.

However, investing is about weighing probabilities. Looking at the data and the official forecasts, preparing for a period of slower growth and persistent inflation seems like a pragmatic move. It’s not about chasing explosive returns. It’s about seeking stability and preserving capital in what could be a very challenging environment for most other assets. It’s about choosing the sturdy umbrella over the fashionable sunglasses when clouds are gathering on the horizon.

Deep Dive

Market & Opportunity

• In 2025, a selection of defensive assets rose over 3% while the S&P 500 fell more than 4%.
• The Federal Reserve has lowered its 2025 growth expectations while raising inflation projections, creating conditions for potential stagflation.
• During the 1970s stagflation period, gold prices increased from $35 per ounce to over $800 by 1980.

Key Companies

• Gold Shares SPDR (GLD): The world's largest gold ETF, designed to act as an inflation hedge and a store of value that operates independently of traditional financial metrics.
• Costco Wholesale (COST): A retail company with a membership model that creates recurring revenue. It focuses on bulk purchases and value pricing, which attracts consumers during economic downturns.
• Wal-Mart Stores Inc. (WMT): The world's largest retailer, positioned as a discount store that benefits when consumers trade down during recessions. Its scale and supply chain efficiency help maintain margins during inflation.

Primary Risk Factors

• Defensive investing is not risk-free; companies can face regulatory pressures and competitive threats.
• Gold can be volatile and does not provide income.
• The stagflation thesis may not occur, and in a scenario of accelerating growth or moderating inflation, defensive assets might underperform growth strategies.
• All investments carry risk and you may lose money.

Growth Catalysts

• A potential stagflationary environment of stagnant growth and high inflation historically benefits defensive assets.
• Defensive sectors like consumer staples generate steady cash flows and serve essential needs regardless of economic conditions.
• Companies with pricing power can pass increased costs to consumers, protecting margins during inflation.

Investment Access

• The collection of stocks is accessible via fractional shares, with investments starting from $1.
• These investments are available on the Nemo platform.
• Nemo is an ADGM-regulated platform that offers commission-free investing.