1 min read

Time to stock up on recession undies?

When blokes stop buying undies it could spell recession. 🩲 But Petco CEO Ron Cough reckons he knows the secret to recession-proof stocks. 🐶 Roof roof. But is a recession looming?
Published on
March 30, 2022

Gentlemen, it’s time to check your undies. Former Federal Reserve boss Alan Greenspan once suggested that when men stop investing in new jocks it’s a sign of a recession on its way. The idea even has its own name: the men's underwear index (MUI), with some analysts suggesting a recession could be brewing, so it might be time to stock up.

A more conventional recession red flag is the relentless rise of inflation. 🚩🚩 As portfolio manager Ben Carlson points out, since 1940 every time inflation in the US has risen above 5%, a recession - aka, two consecutive quarters of declining GDP – has shortly followed. Recessions are a regular part of the business cycle and in the US they’ve occurred on average once every 5.9 years. Still, nothing about the last few years has been average. And with strong US employment and high household savings, plenty of analysts think a recession may not happen. Even the New York Federal Reserve, which looks at bond yield curves rather than the state of our undies, thinks the probability of a US recession this year is just 6%. Recessions don’t mean we need to switch to eating lentils and taking the bus, but often company sales and earnings will fall as consumers spend less money. 📉

In times of recession though, not all companies are created equal. Petco (WOOF) CEO Ron Coughlin thinks our love for floofy friends means ‘the pet market continues to grow’. 🐶 Other companies that have held up in times of recession past have been those we use all the time, like utilities, consumer staples and… dating stocks? Yep, when the going gets tough, the tough get… swiping? Tinder owner Match Group (MTCH) saw big spikes in members during the 2009 recession, while daily active Tinder users reached all-time highs during the depths of the Covid crisis. Just be sure to wear your best recession undies. 🩲

Weekly news from Wall St
Subscribe to Hatch Weekly and get our latest stories straight to your inbox. Read by 10,000+ customers weekly, we help you stay in the know.
Free Getting Started Course
Take your first, or next, step to becoming a confident investor with Hatch's free online course – just 10 minutes a day, for 10 days.

We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.

More recent news articles

More recent learn articles

1 min read
Mar 21, 2023

School’s out for Silicon Valley Bank 🎒

Hindsight is a wonderful thing. How can investors turn Silicon Valley Bank’s ‘what were you thinking?’ moments and incremental failures into life long lessons about how and where to spend and store money? School up on SVB’s lessons learned.
Read more
1 min read
Mar 21, 2023

T-Mobile’s Hollywood hustle buy 💸

Ryan Reynolds got minted with T-Mobile’s purchase of Mint Mobile but that’s not his only Hollywood side hustle. The Wrexham Footie Club owner also sold his Aviation Gin brand for big bucks. And he’s not the only A Lister hoping for return on investment. Who else could be hoping for a big payday?
Read more
1 min read
Mar 13, 2023

The fat cats of weight loss 😼

And the Oscar goes to… Ozempic? The slim-down secret is out and TikTok influencers are dancing their way to their doctor for a script. But what is this ‘new’ wave of injectable treatments really designed to treat and how is Oprah weighing in?
Read more