Defensive securities

**kork13** · 05-22-2011, 02:16 AM

Along the lines of "non-cyclical industry", but basically companies that people will always need. That way, short-term increased/decreased consumer spending won't have much of an impact. I'm talking stuff like food (Publix/PUSH), utilities (Southern/SO or Verizon/VZ), medical (Pfizer/PFE or Johnson & Johnson/JNJ), and similar.

Don't know what you're looking for specifically as far as dividend, but all of the ones I listed here are 3.5%+ div yield right now. Verizon is sitting pretty at 5.25%, and has had a high dividend like that for at least the last 2 years that I've been casually looking at it--if you're not already in it, that might be a good one to consider.

That said, I don't play with individual stocks, at least right now. So take all of this with a heavy dose of salt.

**dczech09** · 05-23-2011, 05:08 PM

Utility companies generally carry a higher dividend yield than average.

Aside from that, I would seek some ETFs and/or mutual funds that invest in sectors such as Consumer Staples, Healthcare, and Utilities.

If you're seeking a defensive position, I would stay away from Technology and Consumer Discretionary as these sectors tend to be very "faddy." What is a good business today is not guaranteed to be a good business tomorrow. I would also be very cautious about funds that invest in energy and commodities; these funds can be very speculative.

I would also stay away from individual stocks. Unless you have $100,000+ to play with, the commissions associated with single stock trades can be very expensive in proportion to the total investment. Remember, stock commissions tend to be regressive... unless you have a different arrangement with your broker, which generally would mean that you have a large pile of funds.

**Mr Nice Guy** · 05-23-2011, 09:23 PM

Thanks for the replys.

I have had XLU and XLE in my portfolio for a little while. XLE seems to have some more intense swings as opposed to the more stable XLU (don't they call that alpha?) But XLE's long term record shows greater gains and less dips than many other spdrs.

I am looking forward to be buying a lot if this bull market turns bear. I have put some price targets on some stocks and I haven't been able to execute because everything is going up! Gotta save that lunch money!

**kv968** · 05-24-2011, 02:43 PM

Originally posted by Mr Nice Guy View Post

Thanks for the replys.

I have had XLU and XLE in my portfolio for a little while. XLE seems to have some more intense swings as opposed to the more stable XLU (don't they call that alpha?) But XLE's long term record shows greater gains and less dips than many other spdrs.

I am looking forward to be buying a lot if this bull market turns bear. I have put some price targets on some stocks and I haven't been able to execute because everything is going up! Gotta save that lunch money!

Actually the spikes you're talking about is more beta than alpha (gotta love all the Greek letters

) Beta measures how much more volatile the stock, ETF or mutual fund is compared to the overall market or sector. The lower the beta number, the less sensitive it is to overall market movements. For example, if the stock or ETF has a beta of 1, then it moves pretty much just like the market. If it has a beta of 1.2 it could be 20% more volatile than the market it's being compared with. Whereas if it has a beta of 0.8 then it would be 20% LESS volatile than the market. Of course it isn't precise, but it gives you an idea of how a stock should or may act when compared to a benchmark.

Another thing to look at concerning volality with ETF's (or mutual funds for that matter) is how many stocks they hold and what percentage of them are in say the top ten of the overall holdings. Some ETF's/mutual funds may be comprised of 50 stocks or more but 50%+ of their holdings may be with just 10 companies. That within itself could cause excess movement in the ETF/mutual fund.

**Hawksworth** · 06-21-2011, 11:09 PM

Most of the people would prefer the securities which offer stable dividend policy with relatively large amount of dividend.But it is not a single factor that people rely on, as they also look for the nature of the securities. Food and energy based securities can be very beneficial as they are considered the best source of stable income during the whole year.

**gambler2075** · 06-23-2011, 07:21 AM

IMO AAPL hit the low for the year at 310... very strong on a day like this...

ALXA at 1.60 is a good buy, for runup into near-term catalyst... past weeks trading looks good to me.

g

**jpg7n16** · 06-23-2011, 10:32 PM

Originally posted by Mr Nice Guy View Post

I have put some price targets on some stocks and I haven't been able to execute because everything is going up! Gotta save that lunch money!

Way to jinx the market Mr Nice Guy!!

Seems like about the time you posted this, the markets went on a downtown for about a month.

Although if you're like me, you like the lower prices

**gambler2075** · 06-24-2011, 01:17 PM