What exactly is stagflation and why should investors care?

Stagflation is when an economy experiences both stagnant growth (or even recession) and high inflation at the same time. It's concerning for investors because many traditional investments perform poorly in this environment. Stocks often drop due to weak economic growth, while bonds struggle with high inflation. That's why defensive assets like those in this collection – including essentials people need regardless of economic conditions – can be valuable portfolio additions during stagflationary periods.

Why do defensive stocks often perform better during stagflation?

Defensive stocks typically represent companies that provide essential goods and services that people need regardless of economic conditions. During stagflation, when growth is slow but prices are rising, consumers focus their spending on necessities like groceries, healthcare, utilities, and housing while cutting back on luxuries. Companies in these defensive sectors often maintain more stable earnings and can sometimes pass higher costs onto consumers, helping them weather the challenging economic environment better than other businesses.

Why is gold included in this stagflation-resistant collection?

Gold has historically served as a store of value during periods of economic uncertainty and high inflation. Unlike paper currency, which can lose purchasing power when inflation is high, gold often maintains or increases its value. During stagflation specifically, when both economic growth is weak and inflation is elevated, gold frequently outperforms many other assets. Investors often turn to it as a "safe haven" that may preserve wealth when both stocks and bonds face challenges.

What does "TTM EBITDA" mean in the stock data?

TTM EBITDA stands for "Trailing Twelve Months Earnings Before Interest, Taxes, Depreciation, and Amortization." It's a financial metric that shows a company's operational performance over the past 12 months. EBITDA helps investors understand a company's core profitability by excluding factors like financing decisions, accounting practices, and tax environments. During uncertain economic times like stagflation, companies with strong and stable EBITDA may be better positioned to weather the challenges.

13 handpicked stocks

Stagflation Standouts

This collection features stocks and assets carefully selected by professional analysts to potentially outperform during stagflation periods. These defensive investments have already shown strength while the broader market struggles, making them worth consideration for economic uncertainty ahead.

Han Tan | Market Analyst

Updated 2 days ago | Published at मई 19