What does "flight to safety" mean in investing?

Flight to safety refers to investor behavior during uncertain or turbulent market periods, when they move money from riskier investments (like growth stocks or emerging markets) to safer assets that historically maintain value during downturns. These safer investments typically include consumer staples, utilities, gold, and government bonds. The assets in this Market Fear collection are specifically chosen because they tend to benefit from this investor behavior.

Why are consumer staples companies considered defensive stocks?

Consumer staples companies make essential products that people need regardless of economic conditions - things like food, beverages, household items, and personal care products. Demand for these necessities remains relatively stable even during recessions, as consumers might postpone buying a new car or taking vacations, but will still purchase groceries, toilet paper, and toothpaste. This consistent demand helps these companies maintain relatively stable revenue and earnings during economic downturns.

How do utility stocks provide protection during market downturns?

Utility companies provide essential services like electricity, water, and natural gas that households and businesses need regardless of economic conditions. Most utilities operate as regulated monopolies with predictable revenue streams and are required to provide their services even during economic hardships. Their stable cash flows typically allow them to pay consistent dividends, making them attractive to investors seeking income and stability during market turbulence.

Why is gold considered a safe-haven investment?

Gold has been valued as a store of wealth for thousands of years and often performs well during times of market stress, inflation concerns, or geopolitical tension. Unlike paper currencies, governments cannot print more gold, which helps preserve its value when currencies weaken. Investors typically turn to gold when they're worried about economic stability or seeking to diversify away from stocks and bonds. The gold mining companies in this collection provide exposure to gold prices while also operating as businesses that can generate profits and sometimes pay dividends.

What is a dividend yield and why does it matter for defensive stocks?

Dividend yield is the annual dividend payment divided by the stock's current price, expressed as a percentage. For example, a stock priced at $100 that pays $3 in annual dividends has a 3% yield. Many defensive companies in this collection have consistent dividend payment histories, providing investors with regular income regardless of stock price fluctuations. During market downturns, this income can be particularly valuable, offering returns even when stock prices aren't appreciating. Higher yields can also provide a cushion against price declines, as the dividend income partially offsets any drop in share price.

16 handpicked stocks

Market Fear

When markets get shaky, these stocks stand strong. Our professional analysts have carefully selected companies known for their stability during uncertain times, focusing on essential goods and services that people need regardless of economic conditions.

Han Tan | Market Analyst

Updated 2 days ago | Published at जून 18