Overnight, U. S. stocks rose on investor expectations of the fiscal stimulus package, and the Nasdaq hit a new high. Specifically, the s & p 500 rose 0.64% to 3327.77, the Dow Jones industrial average rose 1.4% to 27201.52, and the NASDAQ rose 0.5% to 10998.40, an all-time high.

It is worth noting that the Nasdaq composite index has climbed 22.58% so far this year, and the share prices of technology giants such as Apple Inc, Microsoft Corp and Amazon.Com Inc have all reached new highs. On the other hand, the US economic uncertainty index also broke through an all-time high, with Wall Street offering four investment strategies during the economic downturn to hedge the risk of a high pullback in technology stocks.

1. Cash and money markets

In the earnings season, many companies reported results that showed the impact of the epidemic on earnings, but the stock price performance was "in the opposite direction." Take oil giant BP, which announced a second-quarter loss of $6.7 billion on Aug. 4, but its shares rose more than 7 per cent on the day.

In response, Tim Tim Smith, a former Morgan Stanley trader, said that for ordinary investors, more than a few months of market volatility was enough to prompt them to withdraw from a large equity portfolio. The most common places where funds are set aside from the sell-off are cash or money market accounts. Cash accounts (usually in the form of bank or credit union savings accounts) have nothing to do with the stock market and pose little risk to investors.

In addition, the money market is also a common target for investors to hedge against market fluctuations. As US stocks become more volatile, Ed Lopez, chief revenue officer of Calastone, the fund networking company, says investors who have decided to manage their exposure have poured money into money market funds."Recent capital flows show that equity funds have taken profits and converted to cash. "

2. Short-term treasury bonds

A common risk aversion strategy during an economic downturn is to invest in short-term Treasuries. The price of US debt is usually inversely proportional to the price, that is, when US stocks go down, they tend to rise in response to the price of US debt. But since the beginning of this year, as the Fed has provided ample liquidity, Treasury yields have fallen all the way (corresponding to rising prices), with 10-year, three-year and five-year yields all hitting record lows in August.

Tim Smith points out that during the economic downturn, investors tend to hedge strategies, driving up the price of US debt and providing investors with a more stable portfolio. However, not all maturities are at the same risk. In a recession, investors should look for debt with shorter maturities and avoid high-yield corporate bonds.

3. Defence Unit

In addition to cash and short-term debt, some investors can find stable returns in defensive stocks. Smaller, younger companies are not always able to cope with the financial constraints that a recession may impose on companies, so they are not the best investments to hold during a recession. However, large, more mature companies with strong balance sheets (called defense companies) tend to survive economic shocks longer, and many companies continue to pay dividends even if the economy stagnates.

Tim Smith says that if investors do not want to exit the market completely, they can use defensive stocks to lock in risks during a recession, such asProcter & Gamble Co Company, Kangbao thick Soup Company, and Coca-Cola Company Company, etc.. In July, Berkshire Berkshire bought the natural gas assets of Dominique Resources, suggesting that Buffett, the "god of stock", is also investing more in defensive stocks during the recession. In the context of interest rates near zero and gold hitting record highs, defensive stocks still have a "price-to-performance ratio".

4. Precious metals

Gold demand has been boosted by expectations of rising inflation and economic uncertainty, with London gold up more than 34 per cent so far this year and hitting an all-time high of $2055.71 an ounce in August.

Precious metals are usually favored by investors in long-term recessions as a hedge against macro risks. This year, interest rate cuts by central banks around the world have pushed yields lower, and negative-rate bonds have expanded in recent years, driving investors to gold as an "interest-free asset". On the other hand, with ample liquidity provided by the Federal Reserve, the dollar index has been down since July, while gold has been chosen by investors as a hedge against inflation because of limited supply.

Although gold prices have hit record highs this year, Wall Street is still bullish on gold's future performance.Michael Michael Jalonen, an analyst at Bank of America Corporation Securities, said he was bullish on gold.Bank of America Corporation raised his average real gold price forecast for 2021 to $2159 from $2012. Analysts say investors can expect gold to peak at $3000 over the next 18 months.

Tim Smith points out that investors can gain direct exposure to this asset class by buying ownership of tangible goods, exchange-traded funds (ETF) that invest directly in precious metals or holding portfolios of precious metals mining companies.