Equity markets can be one of the toughest markets to survive when there is an economic slowdown. The current slowdown has pushed a majority of the stocks southward anywhere between 15 percent for quality stocks to 70 percent or even more for some poor quality companies. The economic slowdown periods are known to test the best of investors' patience and all investors have got to do in such situations is to control their urges and focus on safety.
Just like in cricket, to win a test match on a difficult batting pitch, you need a batsman with an immaculate batting technique who is also solid in ‘defense’, during tough market conditions marred by a slowing economy, investors need to have a defensive stance in the market. One of the best ways to have a defensive stance is to buy defensive stocks and/or buy stocks that pay dividends regularly. Even better for investors could be to identify quality dividend-paying stocks in the defensive sectors such as IT, pharma and FMCG. This strategy may not only protect investors in the downturn, but it will also support the portfolio returns when the market enthuses investors with an upturn like it always does in the long run.
This story is from the September 02, 2019 edition of Dalal Street Investment Journal.
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This story is from the September 02, 2019 edition of Dalal Street Investment Journal.
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