MW I've made money buying solid companies in terrible markets. Is this stock that soared during the pandemic a good buy?

By Quentin Fottrell

'As the old phrase goes, don't catch a falling knife'

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Dear Quentin,

I have made the most money over the last 30 years buying solid companies in terrible markets, not the other way around.

For some of the panicked people in the world, the flip side is this is why you should have cash on hand to buy. I don't own this stock and am not recommending it, but it's just an example: Zoom Communications (ZM) is now down more than 88% since the pandemic. In a recession, are companies going to cut back on Zoom calls or pay to travel more? My guess is, in looking to cut expenses, they will do more business with Zoom. This is just one stock I have on my shopping list. Can it go down more? Absolutely. As the old phrase goes, don't catch a falling knife, but these are the types of stocks people should be watching. Companies with solid balance sheets, that don't have a lot of debt, produce cash instead of using cash.

This NOT a stock recommendation. Your column is as much about group therapy as financial advice, which is why I wrote this email.

Buying Low

Related: 'I cannot afford to lose more': Will Trump's 'liberation day' tariffs hurt my retirement?

Dear Buying Low,

You must have more perfect timing than a Swiss watch.

If the smartest people on Wall Street knew exactly what stocks would be spared from a prolonged recession on the back of President Donald Trump's trade war, markets wouldn't be heading south in the first place. But you're not the only one with plans of big returns: Individual investors had $4.7 billion worth of net equity purchases on April 3, meaning they bought that amount of shares more than they sold, according to data from J.P. Morgan. Not since the pandemic in 2020 have individuals felt there was such an opportunity to buy the dip. The backdrop is stark: U.S. stocks experienced their most dramatic two-day wipeout in history. In total, markets have shed $11 trillion since Inauguration Day, $6.6 trillion of which was wiped out on Thursday and Friday.

I like your moxy, but the answer may not be found in stocks that fluctuate wildly with the onset of pandemics and economic downturns.

Still, I like your moxy. I take your point that you're not giving stock tips - we, at least, have that in common. Investing in the rearview mirror is easy: Zoom soared during the pandemic primarily because millions of people were working from home and they needed to communicate. Yes, people were not traveling for business trips, so that was part of the equation too, but it mostly benefited from remote work and, while that has stayed with many office workers, more companies (including the federal government) are calling people back to the office. The stock now sits at around $68 and, if you had purchased Zoom shares during those heady days of the pandemic when it reached $559, you'd be sitting on some hefty losses right about now.

Everyone has opinions about recession-proof stocks, some based on data and others based on conjecture, and any of those people - your anonymous self, perhaps, excluded - have services to sell, whether they're financial services or financial information. As my dear old grandmother used to say, if it's not one thing, it's another - and if it's not a trade war or a global pandemic sending stock markets into "free fall" (for now, at least, if you'll excuse the dramatic language). Put another way, if you invest betting on bull markets, prepare for bear markets too. This is a trade war that, while well flagged, came with tariffs attached that surprised even the most pessimistic of market observers. The consensus, as much as there is one, suggests the one investor who appears to be doing well is the one who is well diversified and/or the one who purchased gold (GC00).

A symphony of everything

The answer may not be found in stocks that fluctuate wildly with the onset of pandemics and economic downturns. Remember Peloton $(PTON)$, which reached a pandemic-era peak of more than $167 and now languishes at $5? It may be time to consider boring old healthcare, utility and consumer-staples stocks for the medium and long term, in addition to mid- and small-cap equities - although some analysts say the latter tend to underperform during recessions. Add bonds, cash and non-U.S. equities to your list, too. In other words, you can try to time the market in an attempt to look like the genius who gets it right, perhaps the only one, and buy/sell at the right time, or you can indulge yourself in a symphony of everything and live a full and diversified life.

View recommendations to buy individual stocks with a jaundiced eye, especially if they have not escaped the recent bloodletting.

Hope abides, even in U.S. equities. "A shift in regional allocation rarely helps cushion performance in a market correction," says J.P. Morgan Asset Management. "Investors concerned about a potential recession in the U.S. may be tempted to shift away from U.S. equities into other equity markets, but during U.S. recessions stock markets in all regions tend to fall - sometimes by more than U.S. equities. When you add in the fact that the dollar appreciated during the last two recessions, it's far from clear that concerns about a U.S. recession should lead investors to shift from U.S. equities into other equity markets. Investors are normally better off maintaining a regionally diversified portfolio."

It is human to seek higher ground, but adventurous investors are asking where to find it. J.P. Morgan said hedge funds and ETFs offloaded $40 billion in stocks in the wake of Trump's "liberation day" tariffs announcement on April 2, even while individual investors like yourself may be seeking bargains. Those safe havens, according to Goldman Sachs, include billing-software company Amdocs $(DOX)$, Bank of New York Mellon $(BK)$, grocery chain Kroger $(KR)$, automotive-services firm Valvoline $(VVV)$, healthcare companies Masimo $(MASI)$, Boston Scientific $(BSX)$, Medtronic $(MDT)$ and Thermo Fisher $(TMO)$, plus the credit-ratings companies S&P Global $(SPGI)$ and Moody's $(MCO)$. View such notes with a jaundiced eye; none of those stocks have escaped the recent bloodletting.

With that in mind, resist playing with all sharp objects.

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.

The Moneyist regrets he cannot reply to questions individually.

More columns from Quentin Fottrell:

My portfolio lost 20%. With Trump's trade war, do I sell my stocks and buy gold?

Will Trump's policies lead to a recession? I'm 62 and earn $50K. How should I invest $100,000?

'I'm not being a troll': I bought 'DJT' stock and I'm down 50%. I'm sweating. What now?

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-Quentin Fottrell

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April 06, 2025 14:48 ET (18:48 GMT)

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