When the Stock Market Gets Dangerous, These 6 Investments Have a History of Holding Up

The article points to rising downside risks, citing the CAPE ratio at its second-highest reading on record, continued high inflation, and 10-year Treasury yields near a 25-year high. It highlights Berkshire Hathaway, Coca-Cola, Duke Energy, Johnson & Johnson, Realty Income, and WM as historically resilient stocks that all outperformed the S&P 500 in 2022; Berkshire held $365.5 billion in cash at June-end, while Duke has a $103 billion investment plan through 2030.

Analysis

The defensive label masks a key split: BRK.A, KO, JNJ and WM are principally exposed to operating cash flows, while DUK and especially Realty Income (O) also carry meaningful long-duration sensitivity through capital intensity, refinancing and valuation discount rates. In a renewed yield selloff, the latter pair could fall alongside the broad market despite regulated or contracted revenues; stable cash flow is not the same as stable equity value. Inflation also cuts both ways: pricing power may protect KO and WM over time, but wages, transport and input costs can compress margins before price increases catch up.

The article’s 2022 comparison is weak evidence for forward protection: one regime is not a stress test across rate shocks, earnings recessions or valuation starting points. CAPE is a poor short-term timing signal, so an indiscriminate defensive rotation could underperform if yields ease and cyclicals rebound. For the next 1–3 months, watch real yields and credit spreads; over 6–18 months, the test is whether cash-flow resilience offsets valuation and financing costs. BRK.A’s liquidity is valuable optionality in a selloff, but can be a relative-performance drag in a sustained risk-on market. No valuation or current positioning data are supplied, so avoid assuming any of these names are cheap or under-owned.

Key Decisions for Investors

• Do not buy the six-stock basket as a blanket market hedge. If reducing equity beta, prefer a measured tilt toward BRK.A or WM over adding duration-sensitive O and DUK; size against existing sector exposure rather than headline drawdown history.
• Conditional relative-value idea: long WM / short O if Treasury yields and real yields resume rising. The thesis is lower rate-duration exposure and recurring service demand versus REIT financing/discount-rate sensitivity. Reassess if yields fall materially or O’s relative performance and funding disclosures improve; verify valuation, leverage and near-term refinancing before entry.
• Treat KO and JNJ as lower-beta operating exposures, not crash protection. Track organic volume/pricing and input-cost commentary at KO, and product growth, patent-cycle disclosures and litigation developments at JNJ; deterioration in cash-flow outlook would invalidate the defensive premium.
• Catalyst/risk monitor: a sustained decline in real yields could reverse pressure on O and DUK and make the proposed pair unattractive; widening credit spreads or downward earnings guidance would indicate that defensive cash flows are not insulating equities. CAPE alone is not an actionable timing trigger.