Protective stocks are a type of security that tend to perform well during economic downturns or market volatility. These stocks are companies that are considered „recession-proof“ because they provide basic goods and services that people need, regardless of the state of the economy. Some examples of defensive shares include:
- Healthcare: companies that manufacture and distribute pharmaceuticals, medical equipment, and healthcare services typically perform well during a recession.
- Consumer goods: companies that produce and distribute everyday household items such as food, household goods, and personal care products. These companies usually have stable demand for their products even during a recession.
- Utilities: companies that provide basic services such as electricity, gas, and water usually perform well during a recession as people still need these services regardless of the state of the economy.
- Telecommunications: companies that provide internet, telephone, and cable services typically perform well during a recession because people need to stay connected and communicate with others.
- Real estate: Real estate investment trusts (REITs) can also be considered defensive stocks as they tend to provide a steady source of income through rental payments, even during a recession.
It is important to keep in mind that while these stocks may be less affected by economic downturns, they are not immune to market volatility and may still experience fluctuations in their stock prices.
Furthermore, past performance is no guarantee of future results and it is always important to conduct your research and seek professional advice before making investment decisions.
