A common way to assemble a 'defensive' portfolio of shares is use sector analysis:
The second part of this process is as important as the first. It's not enough to invest in the right sectors if the companies you choose face powerful competition, or if they are in a weak financial position.
The definition of basic necessities should be a fairly literal one. Food, water, heat and light qualify, but designer clothes and luxury holidays don't. Focus on 'need-to-have' items rather than 'nice-to-have' ones.
Sectors that have historically been proven to do well in bear markets, either rising in price or falling appreciably less than the market as a whole, include:
Source: Leuthold Group, Minneapolis
Whether or not history repeats itself needs to take into account some element of common sense. Some of the UK companies are currently heavily indebted as a result of paying for 3G mobile phone licenses. Equally, the suggestion to buy drug stocks should be taken to mean major conventional pharmaceutical groups, not risky biotech outfits. And so on.
The real point is that people will continue to eat, drink, drive cars, take medicines and make phone calls even if they are short of money, whereas they may not buy a new car, move house, buy a new computer or washing machine until better times seem to be on the horizon.
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