What is a Defensive Stock? Why Walmart Can Recession Proof Your Portfolio, and Why Everyone Needs Walmart in Their Portfolio
What is a defensive stock? How does it compare to the more commonly referred to defense stock, and how does Walmart play into all of this? In this blog post, we’ll look at the best stock, and the best basket of defensive stocks that you can add into your portfolio in order to help recession proof your investments. This is a topic that is very near and dear to my heart, and one that I think is very much relevant given the current 2020 recession that is going on, so I’ll try to make this post as in depth as possible on the subject. Regarding Walmart, I have personally been holding onto and adding the stock to my portfolio since 2017, and while I know this gives more firm specific risk to your investments than I usually preach about, Walmart is the exception to the real, today, we’ll talk about why! For more information, be sure to subscribe to our blog for daily posts, or to comment down below with your thoughts and opinions, and we’ll get back to you within one business day with a response.
The top Defensive stocks to buy during a recession in my opinion are as follows:
Johnson and Johnson
United Health Group
And a host of other similar and related defensive companies, read on or subscribe to our blog for additional details and information.
What is a Defensive Stock? And Why Target and Walmart Are My Number One Defensive Stock Picks in the 2020 Recession
My explanation for what a defensive stock is, is really two fold, and encompasses the outline below:
- A stock that does well in a recession, it sells inelastic goods, and either the stock or the revenue does as well or even better in a recession than in normal times. Perfect examples of these, are stocks like Walmart or Target, why do I say this? They are super stores, they are staple stores, they sell literally everything, and in times of chaos, where are people going to shop if not Walmart, Kay Jewlers? Throw Amazon into this mix now too, because they have such a huge product selection, and now sell things like food in a way that Ebay does not. My three favorite defensive stocks at this point, even though Amazon was once thought to be a high risk, offensive tech stock.
- A stock that also does well in times of economic boom – If people have more money to spend, they will spend more at staple stores as well, so the stock will also do well in a bull market. The reason people don’t just load up in defensive stocks all the time, and make their entire portfolio defensive stocks, is because there would be no returns, and a ton of firm specific risk. Sure, in good times theyd do goo, but they don’t do as good as something like the S and P 500 or a global index fund, so long term, your returns are lower.
Walmart vs Target for a Defensive Stocks? Why I Think Target May Catch up to Walmart in a lot of Ways by the End of 2020
Hear me out on this, as I know that Walmart used to have more than 45 times the market cap of Target, ie. 3 years ago, Target had a market cap of $10 billion, while Walmart had a market capitalization of more than $450 billion, yes you read that correctly, $450,000,000,000.00. They’re worth almost as much as Berkshire Hathaway, and even now are still worth $330,000,000,000, while Target has increased to a $60,000,000,000.00 empire during that time period. Here’s my reasoning for why I think Target will surpass Walmart due to this COVID-19 crisis, and for the reason that the line at Walmart is insane!
Here’s my story on this, I typically go to Walmart because I like their atmosphere and low prices. However, this being said, the lines at Walmart are now in excess of an hour when I go on a Saturday, so it is a huge waste of time and a large commitment to shop there now, and this is due to the limitation on people in the store that they imposed about a month ago. At Target, there is no wait, and I can see that just like I’ve begun shopping at Target to save time, many will do the same before me, whoever is left that still has a job in this market, will be moving to Target. I think Target takes 25% of Walmart’s base customers from this, and at the end of the day, we will see Walmart at $200,000,000,000.00 in market capitalization, with Target at $120,000,000,000.00, just my 2 cents on the issue.
Final Thoughts on What a Defensive Stock Really Is, and Why Your Portfolio Should be 10% Recession-Proof Stocks Right Now
What do you think about the Walmart vs Target debate, and what are your favorite stocks on the market currently? Comment down below and let us know what you think as far as stocks that we could add to our list that are inelastic and good stocks in times of a recession. For more information on Walmart, defensive stocks, and all things Finance and accounting, be sure to comment, or subscribe for daily blog post updates. Until next time, you heard it first right here at Inflation Hedging.com.
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