I Have Cash to Invest, But Where Should I Put It in This Market Downturn?

The tariff-driven stock market downturn may cause some to re-evaluate their equity exposure. If you can’t handle volatility or don’t have a time horizon that’s long enough to stick things out until an eventual rebound, rotating into more defensive assets is seen as a prudent move. Still, giving up on equities at a time like this may not be the best move for younger, long-term investors who are continuing to rake in considerable sums of cash. For those who are still early on in their careers, market sell-offs like the one we’re currently in may be more of a good thing than a bad thing. 

Despite the massive unknowns that lie ahead as Trump looks to move ahead with reciprocal tariffs in April, steadily adding to positions at discounts on the way down still seems like a sound long-term move. At the end of the day, you don’t need to jump right in front of risk’s way by betting on the names that stand to be hit hardest from levies. The modestly-valued defensive stocks (think consumer staples and health names) can be a great way to invest through a stock market that’s markedly more volatile than the one we’ve grown accustomed to since 2023 began.

It’s hard to tell if the trajectory for stocks in 2025 will be more like 2022 than 2024. Either way, the following two names, I believe, still seem like great pick-ups for investors looking to keep deploying cash on continued weakness.

The S&P 500

The S&P 500 is an obvious first choice for stock investors who want to buy something but don’t quite have a list of names to pursue. With the index fresh off a 10% correction, investors may wish to put some money toward the Vanguard S&P 500 ETF (NYSEARCA:VOO). Of course, there is a wide range of stocks that are down well more than 10% from their highs.

Either way, starting with the VOO and going from there isn’t all too bad an idea, especially for those who’ve been making a habit of buying a few shares of the VOO after every paycheck. Though it may be too soon to double down on buys after the latest correction, I’m not against topping up such a position with extra cash that’s been meant to be deployed and is just sitting around in savings.

Moody’s

Moody’s (NYSE:MCO) is a Warren Buffett stock that dipped 17% from peak to trough before bouncing back to $459 and change. The popular financial services firm best known for its credit ratings and analytics solutions has an incredibly wide moat and best-in-class pricing power.

As the company embraces AI to enhance its offerings, the associated margin expansion and potential sales growth gains should not go ignored. At 40.8 times trailing price-to-earnings (P/E), the Buffett stock doesn’t look cheap, but then again, it doesn’t deserve to be cheap given its AI prowess in a near-duopolistic market.

Coca-Cola

Coca-Cola (NYSE:KO) is another stable stock that looks enticing as the economy looks to pull the brakes a bit. The stock boasts a 3% dividend yield alongside a 27.9 times trailing P/E multiple. Undoubtedly, the latest run in the stock (up 11% year to date) is thanks in part to a broad rotation out of high-multiple growth and into high-quality consumer staples.

Still, let’s not discount the company’s impressive pricing power in the face of inflationary pressures. During the first wave of inflation, Coke showed us all how robust its brand can be. And if tariffs cause another spike, Coke could be a top place to hide once again. With KO stock going flat for around three years, it’s about time for the long-time Buffett stock to pop again.

The bottom line

The defensive stocks seem like great bets right here if you’re looking to add to your equity exposure after the latest Trump slump. Whatever unfolds with tariffs in the coming weeks, I think it’s the right call to stand by stocks for the long term despite growing fear of the unknown.

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