Defensive Investment Strategy for 2019

Defensive Investment Strategy
for 2019
By www.ProfitableInvestingTips.com

As the year ends and investors celebrate
the holidays with family and friends, the
stock market is deep into correction
territory and the real estate market may
not be very far behind.
http://profitableinvestingtips.com/profitable-investing-tips/defensive-investment-strategy-for-2019

The suggestion one hears from all sides is
that it is time to adopt a defensive
investment strategy for 2019 and perhaps
beyond.

But, just what is a defensive investment
strategy?

When should you go defensive? And
when will it be time to get aggressive
again?

First, here are some thoughts about
going defensive for the coming year.

Defensive Investment Strategy
for 2019

As a practical matter, what investments
should you look at to protect your
portfolio into the next years?

Kiplinger suggests 7 strong buy defensive
stocks for 2019.

Companies from sectors such as health
care and consumer staples offer goods and
services that people need no matter what
the economy is doing, which leads to more
reliable revenues and profits.

Still, even outside those sectors, there are
a few resilient blue chips that either
dominate their market so completely or
offer such diversified product lines that
they can hang in most market
environments.

These are the kinds of stocks investors
want to pile into.

Here are their seven suggestions.

Dollar General: Discount retailer
Waste Management: Largest North
American “environment solutions”
provider

Canadian Pacific Railway: Solid, well
positioned Canadian and US rail system
Estee Lauder: Consumer products
company in makeup and beauty products

Boston Scientific: Well-positioned medical
device maker
Deere: Agricultural machinery giant
Centene: Largest managed care company
in Medicaid sector

All of these investment suggestions have
a strong defensive aspect but how do you
go about choosing your own defensive
investments?

Canadian Pacific Railway

Picking Your Own Defensive
Investment Strategy for 2019

Investopedia explains the concept of
a defensive investment strategy used to
reduce the risk of losses in a down
market.

A defensive investment strategy entails
regular portfolio rebalancing to maintain
one’s intended asset allocation

buying high-quality, short-maturity bonds
and blue-chip stocks; diversifying across
both sectors and countries; placing stop
loss orders; and holding cash and cash
equivalents in down markets.

Such strategies are meant to protect
investors against significant losses from
major market downturns.

As we can see, there is more to a
defensive investment strategy for 2019
than just picking different stocks.

As we mentioned in our article
about how to invest without losing any
money, US treasuries, AAA bonds, and a
bank account with Federal Deposit
Insurance are all safe bets.

On the other hand, in a volatile market
that is losing ground, there comes a point
at which you should be looking to buy
instead of sell.

We recently asked if you should sell or
buy when investments are volatile.

The solid basis for choosing stocks in a
down market is intrinsic stock value.

When the market is in a panic everybody
sells everything just to get out and stop
the losses.

But, there are stocks that have a good
forward-looking income stream in any
market.

(Years ago we wrote about investing in
beer.) finding these companies may take
a little homework and you may throw out
many that you look at as too difficult to
call.

But, when you correctly implement a
defensive investment strategy for 2019
you will be well-positioned to take
advantage of the next upswing in the
market.

How Far Will the Market Fall?

One of the valid concerns at this point is
that the stock market may have already
run its downward course.

If that is the case, it is not time to see but
rather time to start picking up bargains.

On the other hand, the trade war may go
on forever, the dark comedy routine that
is the US government with its recurring
shutdowns may get worse.

The Mueller investigation into Russian
meddling in the US electoral process
seems to be getting closer and closer to
the President.

The ever-mounting US debt will
eventually require a devaluation of the
US dollar, extraordinary inflationary
measures by the Federal Reserve, of end
up in long term damage to the US
economy.

Which direction will these issues take the
market and how far will it fall in the next
year or years?

The things to watch are earnings and
employment.

No matter what is happening in
Washington, with the trade war, or with a
volatile stock market, the intrinsic value
of stocks is tied to forward-looking
earnings and those earnings are tied to
people having jobs and money to spend.

The longer term will be governed by
earnings.

Use the stocks suggested by Kiplinger as
a guide.

Do your own fundamental analysis to
choose investments for your own
defensive investment strategy for 2019.

One More Defensive Investment
Example

The Motley Fool looks at General Mills as
an undervalued dividend stock with a 5%
yield.

As concerns about tariffs and rising
interest rates hammer the markets, many
investors are pivoting toward defensive
stocks that withstand market downturns
better than higher-growth stocks.

Packaged foods giant General Mills
(NYSE:GIS) is usually one of those stocks
but its 35% decline this year likely spooked
conservative investors.

However, that sell-off reduced General
Mills’ forward P/E to 12 and boosted its
forward dividend yield to 5.2%.

Do those figures indicate that it is now an
undervalued income stock that has finally
bottomed out?

General Mills is famous for the Betty
Crocker brand of package baking
products.

Your mother and grandmother certainly
baked Betty Croker cakes and muffins
and used General Mills or Pillsbury flour
when baking “from scratch.”

Unfortunately for the General Mills
business model, women rarely bake any
more that the balance work outside the
home with family chores.

This fact is a detriment to the long term
General Mills business model.

When you look at old stalwarts like
General Mills and see that their stock has
dropped in value, you need to ask why
and make sure that you are not buying
into a company whose long term
business model as it risk.

After all, it is profits and long term cash
flow that give an investment its long term
intrinsic stock value and not its well-
known brand name.

General Mills and Betty Crocker

Defensive Investment Strategy for 2019

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Defensive Investment Strategy for 2019