Defensive Stocks
Defensive Stocks are favorites by stock investors, when the economy seems to be slowing or the stock market looks toppy. These stocks have gotten that nickname for an obvious reason...they provide a measure of protection because they provide products and services for which their is a steady demand. Utilities, foods and soaps are examples. When defensive companies start to out-perform the rest of the stock market, it could be a sign the "smart money" is playing it safe and a weaker market may lie ahead. These stocks are most times classified in the Blue Chip Stock category. A Dividend Investing strategy is most often used with these stocks. In periods of market uncertainty, and just before quarterly earnings are released, stock investors will often park money in theses defensive issues. But be wary, if the earnings come in better than expected, or new economic data is released as positive, cash will then exit Defensive issues in droves, in favor of more economically sensitive stocks.
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