2008 Trades Gone Bad #3: Buying non-durables

Posted Dec 24th 2008 2:00PM by Bryan Perry
Filed under: Coca-Cola (KO), PepsiCo (PEP), Berkshire Hathaway (BRK.A), Newsletters, Johnson and Johnson (JNJ), Campbell Soup (CPB), Colgate-Palmolive (CL), General Mills (GIS), Procter and Gamble (PG), Hormel Foods (HRL), Kraft Foods'A' (KFT), Stocks to Sell

Typically, when the economy enters a recession, companies that are in the consumer non-durable sector, i.e., consumer staples, see their stocks trade higher as money flows into bulletproof subsectors of the economy that don't suffer from spending cuts.

Companies like Proctor & Gamble (NYSE: PG), Heinz (NYSE: HNZ), Hormel (NYSE: HRL), Kraft (NYSE: KFT), General Mills (NYSE: GIS), Johnson & Johnson (NYSE: JNJ), Pepsi (NYSE: PEP), Coca-Cola (NYSE: KO), Campbell Soup (NYSE: CPB), Colgate-Palmolive (NYSE: CL) and even Berkshire Hathaway (NYSE: BRK.B), which was down a whopping 49% before getting a year-end bounce.

I think Warren needs to get off TV and get back to work.

My point here is that all of these fortress names got beat up to the tune of 30% to 50% when they were supposed to be the go-to names that would put in a stealth rally in a bear market.

Seems the kitchen and bathroom stocks didn't work this time around.

Bryan Perry is a contributor to OptionsZone.com.

Tags: bear market, BearMarket, bryan perry, BryanPerry, Heinz, hnz, non-durables, recession, worst trades, worst trades of 2008, WorstTrades, WorstTradesOf2008