A: If there is one rule I would apply, that is: to stick with quality. When markets recover, quality companies recover fastest (they also tend to go down hard because they are often the most liquid).

 

Interestingly, the stocks that have held up the best are companies such as CSL, Resmed and Xero. If you saw Peter’s article on Monday, both CSL and Xero featured prominently in selections for stocks to hold “for the next decade”. Some of the defensives such as Medibank and Telstra have also done pretty well.

 

For recovery, I would avoid:

Defensive sectors/stocks (consumer staples, utilities, property trusts etc and companies such as Woolworths, Telstra, AGL etc)

Small caps (in general)

Second tier companies (companies that aren’t market leaders)

Beaten up industrials

 

I would look more at the leading IT companies, the beaten up major banks (because they really have been whacked), the leading healthcare stocks, and even BHP and Rio.