Interesting article that challenges some pre-conceptions around this area.
https://www.goodreturns.co.nz/articl...or+30+Nov+2019
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Interesting article that challenges some pre-conceptions around this area.
https://www.goodreturns.co.nz/articl...or+30+Nov+2019
Interesting that the article mentions KRAFT.
Watched Live at the Appollo last night and a comedian made much laughter commenting on how KRAFT had a habit of turning good companies into "'****e" companies.
Also got plenty of laughs when he mention cheese coming out of a spray can.
I think that defensive stocks have been eroded as a class, mostly because of growth stocks. The pace of innovation and changes in consumer tastes has been unprecedented. For example, Coca Cola has been a powerhouse for so many years and they've recently dipped in sales because of a shift to healthier alternatives.
A defensive stock to me, is now an ETF that tracks the market as a whole. I don't have it as a large part of my portfolio but it does insulate yourself from losing out big in single stocks on the way down.
Trouble is ETF's have become so hugely popular ithat if there is a panic holders will bail out in the $trillions and a few carefully researched defensive stocks may be the place to be to cushion ones equity from far bigger falls.
I would say in current conditions then more emphasis should be placed on the cash at hand and debt situation as regarding its defensiveness. Having no baliffs is the best way to survive misfortune - which can happen to any venture no matter how carefully planned. Defensiveness is less a sector, and now more of a mode. Of course reliable revenue stands as a major prong to any company but as I said there can always be a calamity or a force 'd majeur that can interrupt any stream of revenue but if one has enough capital one can rebuild , unless of course that calamity is permanent loss of demand for the product/service.
I note the article mentions - among other things - cashflow, and strong balance sheets as important factors.
But as they allude to in the last sentence its always case by case , company by company. They talk about recession proof as the definition of defensive, but then conflate it with volatility so as to hype up the stock CME Group which is no doubt loaded in their portfolios.