During this crazy and unexpected time, there are some investments that continue to provide good returns and we get asked all the time, what should we buy? We often talk about “defensive stocks” making up the bedrock of any portfolio. Defensive stocks are said to have “elastic demand” and what this means is no matter the economic circumstances, demand for them will always remain. A classic example is cigarettes – have you ever known a smoker give up “because of a recession” or “economic downturn”? – Of course not,…they will keep puffing no matter what!
Here are a few examples of shares that you may call defensive and may be well positioned to take advantage of this current crisis:
Unilever. A classic staple in any portfolio making brands such as Domestos, Hellmans, Knorr, Lynx, Persil, Marmite, Vaseline, Walls, PG Tips & Pot Noodle (amongst many, many more). Need I say more? A classic example of diversification all in one share!
Reckitt Benckiser. Makers of the Dettol and Lysol brands. Research shows they can’t make their cleaning products fast enough!
Tesco. Have been hit massively in the last few years with the accounting scandal and de-leveraging of their overseas operations. As everyone has returned to the old “weekly shop” and restaurants are unavailable, something tells me demand is booming!
British American Tobacco. Now whilst smoking is definitely not in vogue in the developed world (think UK, Europe etc), demand in the emerging markets (China and India) is booming. As demand is “elastic” a steady player.
Amazon. Do I really need to explain this one? Since lockdown, one of the few avenues open to us for buying general goods is this monster! They sell everything from Monopoly to printer cartridges to cleaning products to paid for TV.
Now, none of the above is advice or should be construed as guidance in any way just a personal opinion but may help you to understand how professional investment management using modern diversification techniques will always win out in the long term and we will continue to keep our “beady eyes” on all our portfolios. As always, get in touch with your local exports to help ensure your very own Financial Fortress!