The rollout of global tariffs has sparked fears of recession and higher inflation…and has roiled the stock market this year. Through April 8, 2025, the S&P 500 index had cratered 13%. The Magnificent Seven tech stocks were collectively down 25%.
But you’d never know any of this by looking at top fund manager Mark Oelschlager’s stock portfolio—it’s even for the year. Oelschlager has a knack for excelling even in turbulent times. He says it’s possible to stay invested and keep your nest egg relatively safe in the midst of all this chaos. That’s important because trying to jump in and out of the stock market at just the right time is a game few investors can win.
Bottom Line Personal spoke to Oelschlager to find out his strategies for navigating the market this year, as well as stocks that make the most sense to him now…
Rules for a Looming Recession
I’ve done relatively well in 2025, not because I had more information than other investors or because I am better able to predict the future. I’ve done well because I embraced stability when it was out of favor.
Minimizing losses isn’t a very sexy strategy, but it is important to successful long-term investing. Reason: You grow your wealth exponentially by harnessing the power of compounding—earning returns on both your original investment and the returns you received in subsequent years. But even one bad year interrupts this process because it can take so long to recover. Example: If your portfolio loses 30% one year, you need a gain of 43% the next year just to get back to the level where you were.
I’m typically a cautious investor anyway. I hunt for good-quality, undervalued companies with long-term competitive advantages that have been mispriced in the short run. But here are some actions that relate to this year’s environment…
I make minor adjustments in my portfolio in response to what’s going on with US markets, the economy and investor sentiment. As valuations were increasing in 2023 and 2024, I gradually reduced risk. After two years of 20%+ returns in the stock market, investors were overly optimistic and valuations were at the high end of their historical range, especially in a period of elevated inflation and high short-term bond yields.
When I am in risk-off mode, I gravitate toward lower-volatility stocks to be prepared in the event of a change in the market. These stocks tend to have the following characteristics…
Noncyclical, which means they offer goods and services that are indispensable to consumers and therefore always remain in demand.
Steady, modest growers. Their annual earnings growth isn’t exciting, but those earnings tend to hold up better than the rest of the market in economic slowdowns.
Strong free cash flow.
Three relatively safe, recession-proof stocks that I own now…
Bank of New York Mellon (BK), established by a group of individuals that included Alexander Hamilton in 1784, was the first stock traded on the New York Stock Exchange. As the largest custody bank in the world overseeing more than $50 trillion, BNY Mellon has an unusual business model. It doesn’t profit from lending money and charging interest like traditional consumer banks. Instead, the custody bank holds money and assets for safekeeping for institutional investors such as corporations and mutual fund firms. It charges fees for related services including cash inflows and outflows, securities lending, handling trusts and ensuring that payments and trades are routed and settled appropriately. All of this makes the bank’s earnings very consistent and far less cyclical than most banks because there is little credit risk involved. It is a consistent business that is hard for competitors to replicate. BNY Mellon’s faster-growing wealth-management division invests more than $2 trillion for clients. Recent share price: $89.09.*
The Coca-Cola Co. (KO). The iconic beverage company boasts a portfolio of more than 200 brands, including Diet Coke, Sprite, Minute Maid, Schweppes and Dasani bottled water. The company is nearly tariff- and recession-proof with a formidable balance sheet and most beverage production done locally in countries around the world. Cash flow is so consistently strong that Coca-Cola has been able to raise its dividend for 63 consecutive years. In 2022, when the stock market collapsed, Coca-Cola stock returned 11% (including dividends), beating the S&P 500 by nearly 30 percentage points. Recent yield: 2.74%. Recent share price: $71.77.
The Kroger Co. (KR) is one of the largest grocery retailers in the US with well over a dozen different supermarket chains and more than 2,700 stores. Its stores typically have the number-one or number-two market share in their locations. While the national grocery industry is mature and leaves little room for Kroger to expand its physical footprint or produce fast growth, consumer demand for groceries tends to be very stable in all economic environments. In fact, a recession even might help Kroger by boosting sales of its more profitable private-label products. Recent share price: $68.59.
I don’t expect defensive sectors to always protect me. In uncertain times, I take whatever the stock market gives me. Example: Utilities typically are ports in the storm during economic downturns. But that sector was a surprising growth story last year thanks to surging energy needs. Utility stocks in the S&P 500 rose 23% in 2024. But valuations no longer look that attractive, and those stocks won’t necessarily provide the protection they’ve offered in the past. Instead: I have about one-third of my portfolio in health-care stocks, which have lagged the broad market for years and returned only 2.5% last year. Even during a recession, many health-care companies’ earnings are well-insulated because patients don’t cut back on their medications and basic health-care needs. Two health-care stocks I own now…
Cencora (COR), one of the three companies that control 90% of the US pharmaceutical wholesale industry, distributes branded and generic drugs and specialty products to pharmacies such as Walgreens, hospital networks and health-care providers. The business will continue to grow steadily thanks to aging baby boomers and popular new drugs like GLP-1 weight-loss medications. Cencora also expanded its international presence in recent years, purchasing Alliance Healthcare, one of Europe’s leading drug wholesalers. Recent share price: $292.35.
Novartis (NVS). The Swiss pharmaceutical firm sells at a discount to many US competitors. It has numerous blockbuster drugs including Cosentyx (for autoimmune disease), Kisqali (breast cancer) and Entresto (heart disease), as well as a robust pipeline of new drugs in late-stage clinical trials. Instead of trying to enter the lucrative but highly competitive weight-loss drug market, Novartis opted to focus on areas it can dominate such as radioligand therapy, a treatment that delivers radioactive atoms directly to cancer cells to minimize damage to surrounding healthy tissues. Recent share price: $112.75.
I act like a contrarian. Whether we are in a strong advancing market or a declining one, I try to lean in the opposite direction of most investors. In the current environment, the stock market decline hasn’t been dire enough to create a lot of bargains. But I’m nibbling at some opportunities. The more prices decline, the more we will put cash to work. Two stocks that I have been buying…
Ituran Location and Control (ITRN). Most investors have never heard of this small Israeli communications tech company. It provides stolen-vehicle recovery and tracking services and markets GPS wireless products to more than 2.4 million subscribers. The company is a market leader in the US and Israel, but it is experiencing its fastest growth in Latin America, where it has partnered with auto insurance companies that often require vehicle tracking. As cities and countries move into the era of 6G networks and artificial intelligence, there will be a surge in demand for connected cars and Ituran’s services. The company has generated more than $60 million in free cash flow in each of the past two years yet trades at an enterprise value of only $660 mil. Recent share price: $36.29.
Shell PLC (SHEL). Energy stocks have been one of the biggest casualties of the tariff-induced sell-off this year. Slumping oil prices have driven down the valuation and stock price of Shell, one of the world’s largest oil and gas firms. Shell operates in more than 99 countries, producing around 3.7 million barrels of oil per day, in addition to owning refineries, chemical plants and 44,000 gasoline service stations. The British company stands to benefit particularly from the rise in global liquid natural gas demand over the next decade. Shell’s new CEO has also refocused the company on capital discipline and returns, which should pay off with greater cash returns for shareholders. Recent yield: 4.24%. Recent share price: $66.30.
