dealtn wrote:stockton wrote:As to which stocks to buy, my recollection is that supermarkets and property have proven to be effective inflation hedges in the past.
Do you have any evidence for that?
For instance RPI has risen 31% in the last 10 years. Tesco shares are below where they were in 2011.
I think in the case of Tesco, their over-reaching combined with the rise of discounters affected the business and share price.
While I would expect Tesco shares and the dividend to hold up better than average during a crash/recession, the share price would probably decline.
In general, on average, companies with a Beta value below 1 tend to be less economically sensitive and less sensitive to moves in the FTSE.
Tesco Beta is 0.6.
I would expect Tesco to only move 0.6x as much as the FTSE 100 average. So if FTSE declines 20%, Tesco might decline 12%.
It's not a hard rule - just a vague guideline - but over a diverse portfolio of shares it would probably average out.
My main high-yield holdings (each about 5-6% of portfolio, give or take 1%) and their Beta:
AstraZeneca: 0.4
Glaxo: 0.6
National Grid: 0.4
SSE: 0.8
Sainsbury's: 0.5
Imperial Brands: 1.0
Tesco: 0.5
Average: 0.6
I quickly bodged together a mechanically built high-yield portfolio on an other topic a few days ago, here are their Beta values:
Aviva: 1.2
BAE Systems: 0.8
BP: 1.6
Glaxo: 0.6
Sainsbury's: 0.5
Johnson Matthey: 1.1
Land Securities: 1.3
SSE: 0.8
Unilever: 0.4
United Utilities: 0.5
Vodafone: 0.9
Average: 0.9
This morning, as I type this around 11.45am, my own high-yield portfolio* is down 1.0% (Beta 0.6).
The bodged HYP I created the other day is down 1.4% (Beta 0.9).
FTSE 100 is down 2.6% (Beta 1.0)
*
Those are not my only investments, they are just the main constituents of the income part of my portfolio.