When stocks fall, stock rises

When Stocks Fall, Stock Rises

How is this possible?

History shows that some things, whilst not immune to recession, aren’t slaves to it. One of these things is food – and by extension, farming.

In the past year, the ASX200 fell 4.6% and the NYSE fell 11%. Over the same period, food prices rose an average of 9%.

Food is one of the few things that doesn’t automatically fall in price in a recession.

What does tend to shrink in a recession is non-essential spending. We don’t buy that new car. We delay our holiday. We cut back on concerts.

However, we continue to eat. Maybe not at restaurants, but at home.

Every lap of a supermarket is a reminder that food prices have risen, sometimes dramatically.

Meat, seafood, milk, cheese, olive oil, rice, pasta, fresh vegetables, frozen vegetables and pet food have risen in price by as much as 30% over 12 months.

Many economists are forecasting a recession soon. If they’re right, what can we expect – other than rising food prices?

Well, share markets generally fall in a recession. And, because most superannuation funds invest heavily in shares, super returns also fall.

Investment advisors and share traders might recommend that you invest in recession-resistant stocks during a recession. Utilities are a good example. So too supermarkets.

There’s another option – one that benefits from rising food prices. Invest in farming. Invest directly. Invest in the food that’s in the ground or on the tree or in the water. Invest in the food destined for supermarket shelves and dinner tables.

Yes, a farm’s fortunes fluctuate from season to season. But these movements are independent of share market volatility.

For that reason, investing in food production (via the IIF app) can be a great way to mitigate risk. A grape vine becomes a hedge.

Whilst past performance is no indicator of future returns, investing in farm produce has delivered the kinds of returns that are a distant memory for super fund members.

There’s another reason that direct farm investment appeals. There’s not much pleasure in watching shares increase in value, but enormous pleasure from watching crops and animals grow.

When you invest in an Australian oyster farm or beehive or vineyard, you’re investing in something real – the food we eat. You’re not watching for the stock market’s nervous jerk reaction to the next bank collapse or crypto crash.

In fact, it’s a country mile from what’s happening on Wall Street. (Invest in Farming Co-operative members invest in farm produce via the IIF app. They have a farm in their pocket. Click here to learn more about how IIF works – and apply to become an IIF Coop member.)

Leave a Comment

Your email address will not be published. Required fields are marked *

    Scroll to Top