Bloody Monday

On Monday, we woke up to nearly $4 trillion in value wiped out as global markets retracted on bad jobs numbers, lackluster performance, unfavorable interest rates and heavy balance sheets across the world.

JUST IN: Over $3.8 trillion has now been wiped from the stock and crypto markets within the last week.

This crash is now ranked the largest destruction of wealth in history. pic.twitter.com/dJqCqtzB4v

— Jacob King (@JacobKinge) August 5, 2024

As we brace ourselves for increasing market turmoil, it’s crucial to remain vigilant and strategic with our portfolios while focusing on building lasting value with our cash-flowing assets. The financial landscape is set for a bloodbath, and those unprepared will undoubtedly suffer the consequences. However, for the astute investor, there are opportunities to be seized amidst the chaos. This is not just about surviving the storm but thriving in its aftermath—which might include a Great Recession and World War 3—sorry, I don’t make the rules.

The Dow Jones and Nasdaq were both down over 1000 points and your 401k collapse

They want endless World War III World War 3 WWIII #stockmarketcrashpic.twitter.com/Wf6p4gmaWG

— AJ Huber (@Huberton) August 5, 2024

Today, we’ll delve into a recession-proof investment strategy focusing on essentials, and critically examine why BTC cannot serve as a hedge against inflation during a crisis, while exploring the true potential of BSV in fulfilling Satoshi’s Vision.

Essentials in turbulent times

When the market faces a downturn and a serious recession looms, shifting our investment strategy toward essentials becomes paramount. Luxury items and non-essential sectors will likely bear the brunt as consumers tighten their belts. Looking to invest in rare Pokemon cards, Rolex watches or tokenized fine art?

This might not be the play for the near term.

Instead, we must focus on defense, healthcare, energy, as well as food, drink and simple vices—sectors that remain indispensable regardless of economic conditions. And it might be wise to hold cash reserves in the most liquid currency in the world.

Warren Buffett and Berkshire Hathaway now own 4% of all T-Bills issued to the public…

Buffett has ~$277 Billion.
The Fed has $195 Billion.

Warren Buffett is now a larger holder of US Treasury Bills than the Federal Reserve. pic.twitter.com/E611SKMZAY

— Geiger Capital (@Geiger_Capital) August 3, 2024

Defense

As Iran, Israel, Russia, Ukraine, China and others all posture at each other—some already actively engaging in war—investing in defense companies becomes a strategic fortress against financial instability. These firms, deeply entwined with national security, experience unwavering demand regardless of economic cycles.

Governments, prioritizing military readiness and technological superiority, ensure a steady flow of contracts and funding to defense contractors, shielding them from market volatility. This persistent stream of revenue not only stabilizes these companies but also offers investors a reliable return in uncertain times.

Moreover, geopolitical tensions and conflicts serve as a catalyst for increased defense spending globally. As nations brace for potential threats, the procurement of advanced weaponry, surveillance systems, and cybersecurity solutions surges. This heightened demand propels defense companies to the forefront, driving their growth and stock performance. Consequently, investors seeking refuge from economic downturns find a resilient and profitable haven in the defense sector, a bastion of stability amidst the chaos of global unrest.

Here are the top 10 publicly traded defense contractors by market capitalization in 2024:

1. Raytheon Technologies Corporation (NYSE: RTX)

1. Market Cap: $152.79 billion
2. Country: United States
3. Sector: Aerospace and Defense

2. Honeywell International Inc. (NASDAQ: HON)

1. Market Cap: $130.52 billion
2. Country: United States
3. Sector: Aerospace and Defense, Technology

3. Lockheed Martin Corporation (NYSE: LMT)

1. Market Cap: $130.09 billion
2. Country: United States
3. Sector: Aerospace, Defense, Security

4. Boeing Company (NYSE: BA)

1. Market Cap: $110.05 billion
2. Country: United States
3. Sector: Aerospace, Defense, Aircraft Manufacturing

5. Safran S.A. (EPA: SAF)

1. Market Cap: $92.71 billion
2. Country: France
3. Sector: Aerospace, Defense

6. General Dynamics Corporation (NYSE: GD)

1. Market Cap: $78.38 billion
2. Country: United States
3. Sector: Aerospace, Defense, Marine Systems

7. Northrop Grumman Corporation (NYSE: NOC)

1. Market Cap: $71.77 billion
2. Country: United States
3. Sector: Aerospace, Defense, Cybersecurity

8. BAE Systems plc (LSE: BA)

1. Market Cap: $48.99 billion
2. Country: United Kingdom
3. Sector: Aerospace, Defense, Security

9. L3 Harris Technologies, Inc. (NYSE: LHX)

1. Market Cap: $43.06 billion
2. Country: United States
3. Sector: Aerospace, Defense, Communication

10. Hindustan Aeronautics Limited (NSE: HAL)

1. Market Cap: $36.55 billion
2. Country: India
3. Sector: Aerospace, Defense

Healthcare

Healthcare is a sector that endures through all economic climates. People will always need medical care, making it a stable and reliable investment, and globally, the consumption side of this market is largely subsidized, and therefore, quite stable. Companies like Johnson & Johnson (NASDAQ: JNJ) and Pfizer (NASDAQ: PFE) boast solid fundamentals and a history of weathering economic downturns. Their products are necessities, not luxuries, ensuring consistent demand even in tough times.

Looking at biotech startups is a riskier play, and a recession would instead scream for stability, so older pharmaceutical giants, hospital groups and insurers are safest during economic hard times.

Here are the top ten publicly traded healthcare and health-adjacent companies by market capitalization as of 2024:

1. Eli Lilly and Company (NASDAQ: LLY)

1. Industry: Pharmaceuticals
2. Market Cap: Approximately $808.65 billion

2. Johnson & Johnson (NASDAQ: JNJ)

1. Industry: Pharmaceuticals, Medical Devices
2. Market Cap: Over $500 billion

3. UnitedHealth Group Incorporated (NASDAQ: UNH)

1. Industry: Healthcare Services, Insurance
2. Market Cap: Over $470 billion

4. Novo Nordisk (NASDAQ: NVO)

1. Industry: Pharmaceuticals
2. Market Cap: Around $400 billion

5. Pfizer Inc. (NASDAQ: PFE)

1. Industry: Pharmaceuticals
2. Market Cap: Over $330 billion

6. AbbVie Inc. (NASDAQ: ABBV)

1. Industry: Pharmaceuticals
2. Market Cap: Approximately $310 billion

7. AstraZeneca plc (NASDAQ: AZN)

1. Industry: Pharmaceuticals
2. Market Cap: Around $270 billion

8. Novartis AG (NASDAQ: NVS)

1. Industry: Pharmaceuticals
2. Market Cap: Approximately $250 billion

9. Thermo Fisher Scientific Inc. (NASDAQ: TMO)

1. Industry: Diagnostics & Research
2. Market Cap: Over $230 billion

10. Merck & Co., Inc. (NASDAQ: MRK)

1. Industry: Pharmaceuticals
2. Market Cap: Around $220 billion

Energy

Energy remains crucial regardless of the economic situation. The world’s demand for power is unwavering. ExxonMobil (NASDAQ: XOM) and Chevron (NASDAQ: CVX) are well-established, diversified across various energy sources, and possess strong balance sheets, making them reliable choices during market turbulence.

There is also the potential for an increase in military posture globally, and these companies become key suppliers to the military-industrial complex any time a deployment takes place.

Here are the top ten publicly traded energy companies by market capitalization in 2024, along with their respective tickers:

1. Saudi Aramco (TADAWUL: 2222)

1. Market Cap: $1.933 trillion
2. Country: Saudi Arabia
3. Sector: Oil and Gas

2. Exxon Mobil Corporation (NYSE: XOM)

1. Market Cap: $468.70 billion
2. Country: United States
3. Sector: Oil and Gas

3. Chevron Corporation (NYSE: CVX)

1. Market Cap: $349.66 billion
2. Country: United States
3. Sector: Oil and Gas

4. Shell plc (LSE: SHEL)

1. Market Cap: $202.4 billion
2. Country: United Kingdom
3. Sector: Oil and Gas, Renewable Energy, Chemicals

5. TotalEnergies SE (NYSE: TTE)

1. Market Cap: $158.11 billion
2. Country: France
3. Sector: Oil and Gas, Renewable Energy, Natural Gas

6. ConocoPhillips (NYSE: COP)

1. Market Cap: $148.04 billion
2. Country: United States
3. Sector: Oil and Gas

7. PetroChina Company Limited (NASDAQ: PCCYF)

1. Market Cap: $136.40 billion
2. Country: China
3. Sector: Oil and Gas

8. NextEra Energy, Inc. (NASDAQ: NEE)

1. Market Cap: $151.27 billion
2. Country: United States
3. Sector: Renewable Energy

9. BP plc (LSE: BP)

1. Market Cap: $110.5 billion
2. Country: United Kingdom
3. Sector: Oil and Gas, Renewable Energy

10. Enbridge Inc. (NASDAQ: ENB)

1. Market Cap: $82.7 billion
2. Country: Canada
3. Sector: Oil and Gas, Pipelines

Food, Drink & Vices

During economic downturns, people turn to basic comforts. Daily consumables like food and drink, and certain vices, maintain their demand. Companies such as PepsiCo (NASDAQ: PEP) and Coca-Cola (NASDAQ: KO) offer products consumed daily. Additionally, stocks in alcohol and tobacco sectors, such as Anheuser-Busch InBev (NASDAQ: BUD) and Philip Morris International (NASDAQ: PM), provide stability.

Here are the top ten publicly traded food, drink, and raw materials companies for the food industry by market capitalization in 2024:

1. Nestlé S.A. (SWX: NESN)

1. Market Cap: $283.55 billion
2. Country: Switzerland
3. Sector: Consumer Packaged Goods

2. PepsiCo, Inc. (NASDAQ: PEP)

1. Market Cap: $244.6 billion
2. Country: United States
3. Sector: Food and Beverage

3. Coca-Cola Company (NASDAQ: KO)

1. Market Cap: $298.8 billion
2. Country: United States
3. Sector: Beverage

4. Mondelez International, Inc. (NASDAQ: MDLZ)

1. Market Cap: $94.4 billion
2. Country: United States
3. Sector: Food and Beverage

5. Anheuser-Busch InBev SA/NV (NASDAQ: BUD)

1. Market Cap: $108.4 billion
2. Country: Belgium
3. Sector: Beverage

6. Danone S.A. (EPA: BN)

1. Market Cap: $43.79 billion
2. Country: France
3. Sector: Food and Beverage

7. The Kraft Heinz Company (NASDAQ: KHC)

1. Market Cap: $44.86 billion
2. Country: United States
3. Sector: Food

8. Archer-Daniels-Midland Company (NYSE: ADM)

1. Market Cap: $39.01 billion
2. Country: United States
3. Sector: Food Processing

9. General Mills, Inc. (NYSE: GIS)

1. Market Cap: $39.50 billion
2. Country: United States
3. Sector: Food

10. The Hershey Company (NYSE: HSY)

Market Cap: $39.23 billion
2. Country: United States
3. Sector: Confectionery

Small stabs from the dumpster

Amid the chaos, there’s always the temptation to buy undervalued stocks. This strategy requires careful consideration. Identify companies with strong balance sheets that are temporarily undervalued. Think of this as a calculated gamble rather than an all-in bet.

Tech giants like Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) might take an initial hit, but their strong cash reserves and indispensable products mean they are likely to recover quickly. These companies have robust business models and the resilience to bounce back from economic shocks.

BTC: A misguided hedge in crisis

The notion that BTC can serve as a hedge against inflation and risk assets during a crisis is a dangerous misconception. While BTC has gained popularity as a digital asset and speculative investment, its role as a safe haven is highly questionable due to the fact that the BTC ticker is run alongside other “risk-on” assets in major portfolios of groups like BlackRock (NASDAQ: BLK), but also doesn’t have any other utility in the broader market.

Meanwhile, BSV and a few other blockchains seek to provide some utility to the world, but have yet to put a significant dent into any aspect of the mainstream economy.

BTC’s notorious volatility makes it a poor hedge against economic downturns. Unlike traditional safe-haven assets like gold or government bonds, the first of which has outperformed the rest of the market in this current downtown, BTC’s price can swing dramatically within short periods. This volatility is driven by speculation, regulatory changes and market sentiment, making it an unreliable store of value in times of crisis.

BTC also almost completely lacks intrinsic value. Unlike physical assets or stocks of companies producing tangible goods and services, BTC’s value is primarily derived from what people are willing to pay for it. This speculative nature makes it particularly vulnerable during economic downturns when investors seek stability and tangible value.

Limited adoption in crisis scenarios

During economic crises, people and institutions tend to revert to traditional, proven methods of preserving value. Despite growing interest in BTC, its adoption as a mainstream asset remains limited. In times of financial distress, liquidity and trust become paramount, and BTC’s relatively nascent market infrastructure poses significant risks. At the very least, things like gold have churned in the hundreds of billions of dollars in the commercial, non-financial segment of the global economy.

Using an average 2024 price of $1,900 per ounce and data from the World Gold Council, let’s show some examples.

Estimated Annual Gold Usage by Sector (in Metric Tons and Dollars)

1. Jewelry:
– Volume: 2,200 to 2,300 metric tons
– Value: $130-$140 Billion

2. Technology and Electronics:
– Volume: 330 to 350 metric tons
– Value: $20-$21 Billion

3. Dentistry:
– Volume: Approximately 15 metric tons
– Value: $0.9X Billion

4. Aerospace:
– Volume: Approximately 10 metric tons
– Value: $0.6X Billion

5. Medical:
– Volume: Approximately 10 metric tons
– Value: $0.6X Billion

6. Decorative Uses and Other Industrial Uses:
– Volume: Approximately 35 metric tons
– Value: $2.1385 Billion

Summary of Gold Demand (Annual Estimates in Metric Tons and Dollars)
– Total Gold Demand:
– Volume: Almost $245 Billion

BTC is used for some non-financial, non-investment activity as well, but the volume is small by comparison and mostly focused on making luxury purchases. According to BitPay, here’s some of those numbers:

Annual Transaction Volumes

1. 2019: BitPay reported $1 billion in payments volume​​.
2. 2020: Despite the pandemic, BitPay maintained a similar volume to 2019, processing nearly $1 billion in crypto transactions.
3. 2021: BitPay processed over $1.5 billion in cryptocurrency payments​.
4. 2022: BitPay’s transaction volume increased, reaching approximately $2 billion due to the broader adoption of cryptocurrency for payments​​.
5. 2023: Continuing its growth, BitPay processed around $3 billion in payments volume, as reported in various financial news sources.

2024 Estimates

• Q1 2024: During the first quarter alone, BitPay saw a 20% increase in transactions compared to the same period in 2023​ (PaySpace Magazine)​​ (GlobalFinTechSeries)​. If the trend continues, the estimated annual volume could surpass $3.6 billion for 2024.

Regulatory risks

While some growth in retail use as a means of payment is encouraging, the fact that the focus of those payments tends toward luxury purchases is discouraging if we are entering a recession and an election year while the regulatory landscape for BTC is still evolving.

Governments and financial institutions are grappling with how to manage and regulate the industry, and this uncertainty can lead to sudden regulatory actions that impact BTC’s price and usability, adding another layer of risk during economic instability.

The true potential of Bitcoin (BSV)

I keep thinking that if any of this technology would matter for the sake of growing our way past these cyclical crises, it would be the disruptive nature of Bitcoin inherent to BSV, which split away from BTC to maintain and encourage the proliferation of Bitcoin’s disruptive technologies instead of just the lust for “number go up” for investors. BSV focuses on tokenization, cash payments, data integrity solutions and on-chain trading of assets in a way that is more secure, transparent, faster and cheaper than any other tool currently available. And I’m not talking about just among blockchains. The numbers I’m seeing from the Teranode team are showing that BSV could be capable of faster, cheaper throughput than Visa (NASDAQ: V), NASDAQ and SWIFT combined!

Despite this, it is often rejected by entrenched financial powers.

These entities have a vested interest in maintaining the status quo and are wary of technologies that could disrupt their control. However, BSV’s commitment to transparency and efficiency makes it a compelling alternative to traditional systems.

The role of BTC and big finance

BTC is increasingly being bought by “big finance,” with influencers often acting as controlled opposition. Institutions like CME (NASDAQ: CME) and BlackRock, influencers paid by DCG or Jack Dorsey’s Block, along with retail traders, use BTC primarily as a risk-on trading asset to accumulate purchasing power in terms of USDT, a derivative asset of the US Dollar managed by some old crooks from the gambling industry at iFinex corporation. This creates a market that is fundamentally weaker and more fraudulent than the “real” economy that Bitcoin was designed to disrupt.

As we potentially enter a Great Recession and face global geopolitical tensions, BTC’s role as a safe haven becomes even more dubious. The reliance on BTC by big finance suggests it will not provide the protection many hope for in times of severe economic distress. Instead, only BSV, with its focus on real-world utility and adherence to Satoshi’s Vision, offers a pathway to a more secure and transparent financial future.

Strategic resilience: Diversify your portfolio

I know this has been a longer article, but I think it’s important to understand risks.

In conclusion, the key to navigating market turmoil lies in strategic resilience. Focus on essential sectors like healthcare, energy and basic comforts to provide stability in your investment portfolio. While speculative assets like BTC have their place, and BSV could be a long-term solution to solving broader problems with the economy, they cannot be relied upon as a hedge against inflation or economic downturns just yet.

Investing in BSV provides an opportunity to support and benefit from the true potential of blockchain technology, and investing in BTC is basically just a hedge that BlackRock and other old-money titans might make it pump. By focusing on real-world applications and maintaining transparency and efficiency, I think there is still a very real opportunity to catch fire and maybe even save the world in the process!

As we face the impending market downturn, remember to think like a survivor. Invest in what remains essential and indispensable. Keep an eye on fundamentally strong companies that might be undervalued during the downturn. Stay vigilant, stay strategic, and let’s turn this market turmoil into an opportunity.

Watch Siggi Oskarsson on CoinGeek Backstage: Creating value on a scalable blockchain