There has been constant uncertainty regarding the possibility of the United States economy plunging into a recession, possibly in the latter part of 2024.
This uncertainty puts investors in a position where they must select means to safeguard their wealth in economic turmoil. To create a portfolio that guards against a recession, Finbold consulted OpenAI’s latest and most advanced artificial intelligence (AI) tool, ChatGPT-4o.
For this case, the tool provided stock and crypto assets with the potential to sustain the effects of an economic downturn.
Stock portfolio
Regarding the stock portfolio, the AI platform emphasized defensive equities, including consumer staples like Procter & Gamble (NYSE: PG) and Coca-Cola (NYSE: KO). These companies produce essential goods that remain in demand regardless of economic conditions, ensuring steady revenue streams.
It also recommended utilities such as NextEra Energy (NYSE: NEE) and Duke Energy (NYSE: DUK), which offer stability by providing indispensable services like electricity and water. Similarly, healthcare giants Johnson & Johnson (NYSE: JNJ) and Pfizer (NYSE: PFE) maintain robust medical supply and pharmaceutical demand, making them resilient choices.
On the other hand, the AI tool provided dividend-paying stocks. High-yield dividend stocks like AT&T (NYSE: T) and Verizon (NYSE: VZ) are known for their history of significant payouts, offering steady income even during economic downturns. Additionally, dividend aristocrats such as 3M (NYSE: MMM) and McDonald’s (NYSE: MCD), which have consistently increased their dividends for over 25 years, showcase reliability and stability, as per the tool.
Value stocks, including blue-chip companies like Berkshire Hathaway (NYSE: BRK.A) and Microsoft (NASDAQ: MSFT), are also featured for their strong balance sheets and stable earnings.
To provide broad market exposure, the portfolio also includes S&P 500 ETFs like SPY and VOO, which focus on large-cap U.S. companies. A gold ETF (GLD) is also included, as gold is traditionally seen as a safe-haven asset, protecting against market instability and inflation.
Recession-proof stock portfolio allocation. Source: ChatGPT-4o
Crypto portfolio
On the cryptocurrency side, the ChatGPT portfolio highlighted major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). Bitcoin, often called “digital gold,” is the most recognized and widely held cryptocurrency, known for its store of value properties. With its smart contract functionality and extensive ecosystem, Ethereum is a fundamental crypto asset.
It also explored stablecoins such as USD Coin (USDC) and Tether (USDT) over their stability, pegged to fiat currencies and acting as a hedge against crypto market volatility.
Utility tokens like Binance Coin (BNB) and Chainlink (LINK) were also identified for adding further diversity. BNB, integral to the Binance ecosystem, offers transaction fee discounts and other use cases, while its coin burn mechanism reduces supply, potentially increasing its value. Chainlink, used for decentralized oracles, is crucial for smart contracts and enhances utility and demand in the growing decentralized finance (DeFi) sector.
Recession-proof crypto portfolio allocation. Source: ChatGPT-4o
Importance of diversification
Notably, the generative AI tool also called on investors to consider diversification across different sectors and asset classes to reduce risk while emphasizing regular rebalancing to maintain the desired allocation. At the same time, it advocated for researching to stay informed about market trends and economic indicators for better decision-making.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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