Over the past two weeks, investors have been running for cover to avoid the recent bout of market volatility. One asset attracting attention as a haven in stormy waters is Bitcoin. However, while the cryptocurrency might look like an attractive investment in the current environment, it has its flaws.
Indeed, one of the reasons why Bitcoin hasn’t really taken off as an independent currency is that it’s difficult to trade. Its value is also highly volatile. The price of the cryptocurrency can move hundreds of dollars in just a few seconds. That makes it pretty unreliable as a currency.
The costs of buying and selling Bitcoin is also quite high compared to regular investments. As such, it might be better to avoid it altogether. High-quality, blue-chip income stocks could be a better investment.
There are a handful of FTSE 100 companies that seem well-placed to weather the current storm. These include consumer goods giant Unilever, which owns world-famous brands such as Ben and Jerry’s ice cream.
While the demand for such products and might drop off in the near term, from a long-term perspective, the coronavirus outbreak isn’t going to lead to a significant decline in the consumption of ice cream.
Reckitt Benckiser is another option. The owner of cleaning brands such as Dettol and Harpic is unlikely to see a sustained drop-off in demand for its products. It’s highly likely the need for cleaning products will increase in the next few months as authorities seek to slow the spread of COVID-19.
As well as defensive consumer goods companies, other businesses that provide essential products or services are likely to be better buys than Bitcoin in the medium term.
Halma, which provides health and safety equipment for multiple industries, is a great example. There will always be a demand for health and safety products, even if the sector might suffer some near-term disruption. When the economy restarts, demand should return to normal levels.
Blue-chip pharmaceutical companies, such as AstraZeneca and GlaxoSmithKline, fall into this bucket as well. Unless the COVID-19 virus wiped out the entire human population, there will always be a growing demand for healthcare services and drugs.
These two companies are some of the largest pharmaceutical groups in the world. That implies they should be able to whether the virus storm and come out the other side.
Unlike Bitcoin, all of these companies also offer regular dividend distributions. In most cases, investors have to pay to store Bitcoin. So, not only do these companies look to be better investments than Bitcoin over the long term, but they’ll also pay you while you wait for the economy to return to growth.
What’s not to like?
It’s official: global stock markets have been on a tear for more than a decade, making this the longest bull market in history.
But this seemingly unstoppable run of success poses an uncomfortable question for investors: when will the current bull market finally run out of steam?
Opinions are split about whether we’re about to see a pullback — or even a bear market — in 2020. But one thing is crystal clear: right now there’s plenty of uncertainty and bad news out there!
It’s not just the threat posed by the coronavirus outbreak that could cause disruption — Trump’s ongoing trade-war with China and the UK’s Brexit trade negotiations with the EU rumble on... and then there’s the potential threat of both the German and Japanese economies entering recession...
It all adds up to a nasty cocktail with the potential to wreak havoc and send your portfolio into a tailspin.
Of course, nobody likes to see the value of their portfolio fall, but fortunately, you don’t have to go it alone. Download a FREE copy of our Bear Market Survival Guide today and discover the five steps we believe any investor can take right now to prepare for a downturn… including how you could potentially turn today’s market uncertainty to your advantage!
Rupert Hargreaves owns shares of Unilever. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK has recommended AstraZeneca and Halma. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.