Defensive Stocks

Defensive stocks are stocks of companies that tend to be less affected by economic downturns. In simple terms, defensive stocks belong to businesses people still need even when the economy is weak. Defensive stocks are important because investors may buy them when they want more stability. These can include companies in areas like utilities, healthcare, consumer staples, or essential services. For example, a company that sells basic household products may be considered defensive because people still buy those products during difficult times. Defensive stocks are not risk-free. They can still fall, but they may be less sensitive to the business cycle than more aggressive stocks.