When interest rates are pushed up ten consecutive months, it's not surprising that some things will break.
Overseas we saw banks collapsing in the US and one of the biggest and oldest global financial institutions in Credit Suisse disappearing overnight in Switzerland.
Here in Australia, the housing market has plunged and consumers are locking up their wallets.
Perversely, this pain is exactly what central banks like the Reserve Bank and the US Federal Reserve desire, in order to pour cold water on high inflation.
So in such troubled times, what are the S&P/ASX 200 Index (ASX: XJO) shares that could, not only endure, but thrive?
Ophir portfolio managers Steven Ng and Andrew Mitchell had some ideas:
Make no mistake, dark clouds are here
The Ophir fundies did not sugar-coat the dangers stock markets face in the near future.
"If, indeed, recession is ahead for the US, which looks more likely than not, history shows S&P 500 Index (SP: .INX) earnings fall by a median of -13%," read Ng and Mitchell's latest letter to investors.
"Historically, US earnings are still well above their long-term trend line (by about 24%). They have been boosted by excessive fiscal and monetary policy during COVID, as well as expanding margins as companies put through big price increases for customers."
This does make the Ophir team "cautious". But it doesn't mean they're getting defensive.
Ng and Mitchell urged investors to stay focused on the long term.
"In this uncertain environment it's important to remember the opportunity cost of not being invested in the share market can be very high, given it is an endeavour where long-term returns are overwhelmingly skewed in your favour."
The stocks that can fight through tough economic conditions
So what are the ASX shares the Ophir team is buying at the moment?
Firstly, they have shifted some of their smallest-cap holdings for slightly larger businesses.
"Given heightened downside risks, this provides us with extra liquidity advantages so we can more easily pivot portfolio positioning."
Secondly, the team has gone overweight for companies with "more resilient, less macro-sensitive earnings".
"For example, we hold insurers AUB Group Ltd (ASX: AUB) and NIB Holdings Limited (ASX: NHF), which are seeing an upswing in premiums," read the letter.
"And Resmed CDI (ASX: RMD) in the healthcare industry, which is benefiting from structural growth in its key product for its core customer base (those with sleep apnea)."
The last 12 months have been turbulent for most non-mining stocks, but this trio has stood firm.
The AUB share price has risen a handsome 22.6% over that time, NIB is up 13.3% and ResMed is 5.54% higher.
A bonus is that AUB (2%) and NIB (3.25%) both offer dividend yields to soothe the volatility that's expected in the next year or so.
