Morningstar Insights: How Should I Survive The Recession?

Fernando Luque, Senior Financial Editor at Morningstar Spain thinks that asking if there will be a recession (and how to avoid it) misses the point. The best questions people are asking are ‘am I okay?’ and potentially ‘can I do something smart?’

One of the issues that likely will worry investors in 2023 is the possibility of suffering through a recession. A recession will have an impact on both the daily life, and the working life, of citizens. But it will also impact our investments, as recessions affect corporate earnings, interest rates and the valuation of different asset classes

Supply Chains: A New Year’s Resolution?

Mike Coop, chief investment officer, Europe, Middle-East & Africa for Morningstar Investment Management agrees that “as investors, the reality is that a recession appears the most likely scenario for many countries”.

However, it is impossible to know both the severity and duration of any potential recession. According to Preston Caldwell, Morningstar’s head of US economic research, it’s a virtual coin toss – at least in the US, which accounts for around a quarter of the global GDP and over 60% of the global stock market.

He stresses the need to look beyond 2023: “either way, we expect growth to accelerate again in 2024 as the Federal Reserve lifts off the brakes”, he says.

It’s not all bad news for 2023. The resolution of supply chain issues has begun to lower the price of goods and should continue to stamp down inflation. Caldwell forecasts inflation has a reasonable probability of receding to normal levels in 2023 and could even undershoot the Fed’s 2% inflation target by 2024.

What Should I Do Now?

Coop also stresses the fact every investor will endure multiple recessions in their lifetimes. The key is how we deal with them, as recessions have a habit of bringing out the worst in investors. He offers three recommendations for investors to deal with a recession (which are the foundations of Morningstar Investment Management):

Goal Setting as a True North 

Coop says it is important to make sure your goals and objectives remain relevant. “Given the changes we’ve experienced in recent years, it is not unusual for these goals to have shifted. This includes confirming the timeframe for reaching them. Whatever the outcome of this review, there are big advantages of measuring success in terms of progress to reaching your goals, rather than beating the market”.

Stay the Course with a Well-Diversified Portfolio 

Coop recommends erring on the side of caution every time there is a period of uncertainty, adding “check you are taking the right amount of risk to reach your goals – one that you can live with in bad times and one that will be enough to at least keep pace with inflation.” How to do this? Simply by having a diversified portfolio including assets that behave differently to others when there is recession – such as equities and high-quality bonds.

Use Valuation to Get the Odds in your Favor

Coops also thinks it’s “desirable to favour assets that already reflect pessimism about the future as they are less prone to falling than assets that are highly popular, have gone up a lot and are priced for the best possible scenario – and therefore, not very likely to occur.

“Within equities, we find it imperative to balance exposure between the most attractively valued assets along with stabilisers such as dominant companies with little debt and goods and services that are perennially in demand. Examples can often be found in areas like healthcare, utilities and consumer staples”.

The Real Issue is Fear

According to Coop, asking if there will be a recession – and how to avoid it – misses the point. The true questions people are asking are “am I okay?” and potentially “can I do something smart at this time?”

While these questions are always well intended, they could lead to dangerous behaviours, and so it is always healthy to center back on the truths of investing during a recession. According to Coop, these are the truths of investing in a recession:

  • To get investment returns you need you to take risk—cash is unlikely to help you beat inflation and grow wealth over time;
  • Recessions are common (occurring every seven-to-10 years on average), temporary (lasting several years) and eventually followed by economic recovery;
  • Stocks tend to front-run the economy, not the other way around. They will also front-run the economy before the recovery happens. This makes market speculation incredibly difficult as you need to get two decisions right (exit point and re-entry point) amid heightened uncertainty. Very few, if any, have this skill;
  • Stocks do have a track record of falling before and during recessions because company profits fall and bankruptcies rise. However, they have always recovered lost ground in the years that follow;
  • Bonds have a good track record because inflation and interest rates tend to fall. Today, rates and yields are high enough for bonds to provide this offset;
  • The main way you fall short of your financial goals is a permanent loss of capital where you never recoup the losses. These can occur in recessions (such as a low-quality investment that goes bankrupt), so care needs to be taken;
  • Three killers that trigger permanent losses are: 1) speculative investments with no basis for their valuation, 2) assets with too much debt, and 3) selling out at the bottom because of behavioural biases;
  • Buying shares when they are cheap tends to lead to higher-than-usual returns because markets price in bad scenarios and there is upside if conditions improve.

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Pharmacare Finance p.l.c. – New Bond Issue

Pharmacare Finance plc (the “Issuer”), is pleased to announce the issue of €17,000,000 Unsecured bonds at 6% at a nominal value of €100 per bond, redeemable in 2033 (the “Bond Issue”), following approval by the Listing Authority.

This bond issue will be subject to a minimum of €1,000, and will be issued at par. The interest rate of 6 per cent will be paid annually on 3 February as from 3 February 2024 (the first interest payment date).

The use of the bond proceeds will consist of:

  • an amount of circa €5,200,000 of the Bond Issue will be used by the Issuer for the redemption of the outstanding amount of 2018 Prospects MTF Bonds remaining in issue (including payment of interest thereon and of the Redemption Premium);
  • an amount of circa €3,600,000 of the Bond Issue will be used for the purpose of part financing the capacity expansion of the Group’s laboratory and pilot-scale formulation within the existing facility in Hal Far, Malta and investment in property, plant and equipment ancillary to the Group’s operations;
  • an amount of circa €3,800,000 of the Bond Issue will be used for the purpose of part financing further product development projects; and
  • the remaining balance of the Bond Issue will be used for the general corporate funding purposes of the Group.

Full details about this Bond Issue are set out in the Prospectus dated 5th December 2022 which can be found here.

MeDirect will be accepting applications from anyone, who is interested. All applications must be received by not later 20th January 2023. In the event of over-subscription, the Issuer reserves the right to close the Offer Period before this date.

If you are interested in applying, please send us a Secure Mail or contact your Relationship Manager.

For further information, please call us on (+356) 2557 4400 or send an email to

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MeDirect contributes to the Foodbank Lifeline Foundation

Christmas is a time for giving and MeDirect strives to continue helping communities, especially during this time.

The Reverse Advent Calendar Campaign brings the community together to help those in need, therefore, in an effort to help Foodbank Lifeline Foundation, MeDirect staff took part in this initiative to help replenish food and daily needs for families in need.

On Saturday 10th December members from the St John Rescue Corp came to Tigne Point Piazza to collect donations. 

St John Rescue Corps sorting out the MeDirect donations. Photo: Facebook page of the Foodbank Lifeline Foundation

How Can you Help?

The Foodbank Lifeline Foundations created many ways that you can help, making it easier for everyone to get involved. Visit to find out all the details. 

Should you wish to contribute by donating money, you may do so here:


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