Analysis of Stocks That Rose During the Great Recession (2007-2009)

This analysis is based on a Reddit discussion [1] where users investigated which stocks performed well during the Great Recession, noting that most familiar stocks dropped approximately 40% during that period. The investigation reveals that very few stocks actually gained during this severe economic downturn, with cash, short positions, and ultra-defensive sectors being the primary exceptions.

The Great Recession officially lasted from December 2007 to June 2009, during which the S&P 500 index declined by 37.87% [0]. This represented one of the most severe economic downturns since the Great Depression, wiping out a decade of market gains [2].

According to comprehensive analysis of 1,363 U.S. mid-cap and larger stocks, only

had positive total returns during the entire recession period [2]. This extreme selectivity demonstrates the difficulty of finding winning stocks during severe economic downturns.

showed surprising resilience with discount retailers thriving as consumers sought value. Dollar Tree (+28%), Walmart (+4%), Ross Stores (+11%), and Family Dollar all posted gains. Auto parts retailers like AutoZone (+22%) and O’Reilly Automotive also performed well [2].

demonstrated recession resistance with several pharmaceutical and medical device companies gaining. Myriad Genetics (+49%) and Vertex Pharmaceuticals (+15%) led the sector, benefiting from medical necessity creating recession-resistant demand [2].

saw Netflix emerge as an early winner (+44%), as consumers sought affordable home entertainment options during the downturn [2].

: Allegiant Travel Company gained during the recession, benefiting from falling oil prices reducing operational costs and consumers seeking budget travel options with high load factors (90%+ capacity utilization) [4].

: For-profit education companies like Career Education Corporation gained as unemployed workers sought retraining opportunities during high unemployment periods [4].

The analysis reveals several important caveats that investors should consider:

: 98% of stocks lost money during the recession [2]. Even among gainers, many underperformed during the subsequent recovery. Notably, 36% of companies from that period no longer exist (acquired, bankrupt, or delisted) [2].

: Several companies that gained during the recession actually underperformed during the recovery. Myriad Genetics gained 49% during the recession but lost 13% during recovery, while H&R Block gained 0.4% during recession but lost 1% during recovery [2].

: Pharmaceutical gains may not repeat in future recessions due to different regulatory environments. REITs performed poorly during the housing crisis but might fare better in non-housing-related recessions. Financial sector winners were largely government-supported outliers [4].

: Many 2008 winners benefited from unique circumstances including government bailouts and specific market dislocations that are unlikely to recur [2][4].

: The economy and market dynamics have evolved significantly since 2008, potentially altering which sectors might perform well in future recessions [2].

: Focusing only on winners ignores the 98% failure rate among stocks during the recession period [2].

: No investor can perfectly time market bottoms and recoveries, making stock selection during recessions extremely challenging [2].

: Historical patterns suggest that defensive positioning and cash reserves typically provide better risk-adjusted returns than attempting to pick individual recession winners [2][4].

: Analysis shows that picking the right industry was more important than individual stock selection, as performance varied widely within sectors [2].

: Mid-cap and larger companies showed better survival rates, with smaller companies experiencing higher volatility and failure rates [2].

The analysis reveals that during the Great Recession (December 2007 to June 2009), the S&P 500 declined 37.87% [0], with only 32 out of 1,363 analyzed U.S. stocks (2%) achieving positive returns [2]. Top performers included Bowles Fluidics Corporation (+58%), Myriad Genetics (+49%), Netflix (+44%), Dollar Tree (+28%), and AutoZone (+22%) [2].

The most successful sectors were discount retail, healthcare/pharmaceuticals, and budget entertainment. However, the analysis strongly suggests that holding cash was actually a superior strategy for most investors, providing capital preservation during the market decline and buying power for undervalued opportunities at market bottom [2][4].

Users should be aware that attempting to replicate Great Recession performance patterns carries significant risks due to non-repeatable anomalies, structural market changes, survivorship bias, and timing challenges. Historical patterns indicate that defensive positioning and cash reserves typically provide better risk-adjusted returns than attempting to pick individual recession winners [2][4].