Within US stock funds, cyclical stock ETFs attracted more flows
than defensive stock ETFs, as financials were the strongest sector by flows (see US sector flows).
Not exact matches
As the economy improves, the
stock prices on these types of businesses often climb higher
than the more
defensive operations.
Despite all the negative chatter about low - paying fixed income these days, bonds are still safer
than stocks and it pays an income, a key part of a
defensive portfolio.
And, ever since
stocks and bonds in emerging markets erupted in turmoil in January, investment banks native to Asia, Africa and Latin America have been forced to take a
defensive posture to heal themselves rather
than an entrepreneurial one to raise money for their clients.
Unlike more
defensive sectors (such as utilities), price gains for mature tech
stocks have largely been led by earnings growth rather
than by multiples expansion.
However, Dollar General is more
than just a
defensive stock, as it is clearly operating in an environment that is experiencing steady, year - on - year growth.
Conversely, when the economy contracts,
defensive stocks will likely fare better
than growth
stocks with lower - realised volatilities.
I am considering more
stocks in the green zone, which has more stable
defensive stocks,
than the red zone, which has
stocks that will do well if the economy has a strong recovery.
If you are going to hold the underlying
stock across some anticipated volatility event (like earnings) then you may be better off writing an option that has more premium in it
than the near - month option, as a
defensive measure.
It should also be known that most investment managers have no choice but to own
stocks, and if they think times are going to be harder
than normal, they will migrate toward
defensive stocks.
The P / E tends to be lower for
defensive than for cyclical
stocks, throughout the turns of a business cycle.
One of Graham's criteria suggested that
defensive investors should avoid
stocks trading for more
than 1.5 times book value.
Frankly, that's more
than enough to keep
stocks on the
defensive.