Consumables

Products used by people or businesses that must be replaced on a regular basis because they are used up or quickly worn out in use.

Consumables(for consumers) stocks are thought to be good investments in a recession or times of uncertainty as people will need to buy dog food. As Peter Lynch would say, you can forgo eating lobsters, but you can’t forgo eating cereal. In fact, you might buy more cereal to make up for the lobsters. (also known as the substitution effect)

In 2008, we have seen some economic turbulence and WalMart has done well, outperforming the S&P 500 as well as many other retailers. This may add credibility to the theory above.

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