It makes little difference during a bull run. Just tag along. Every stock on the ride will win. Bears are different. They are furtive creatures. You can pray that you do not run foul of one. You can also learn how to hike in the forests they like.
Some stocks behave like bonds during a recession. The checks keep coming on the dot. That is because the corporations make stuff which we cannot stop buying. Lean and mean management is another tell-tale sign of such reliable stocks. Thirdly, they have plenty of cash to hibernate. They lie low during a lean period. They wake up and charge once the sun breaks through.
Okay, so you want an example. Try Johnson & Johnson (NYSE: JNJ). Can you imagine life without contact lenses, adhesive bandages, or cold and pain relief? It would be hard to find a physician or a surgeon who has not saved lives using many of this corporation’s thousands of brands.
JNJ does not inhabit the Major Drugs Industry as social service. The April 2008 Price to Earnings fraction is below 17. What could happen here during the 2008 recession? The JNJ stock P/E is expected to drop below 15. Excellence in management, rather than patents alone, protects your financial interests.
Who says that you have to take risks for profits?