Playing Defense: Three Stock Strategies to Help Control Risk

Defensive stock strategies can help a portfolio better weather an economic downturn or bouts of market volatility without sacrificing all the growth potential of equities.

This week, Craig Siminski, of CMS Retirement Income Planning, shares an article outlining three defensive strategies that may help during economic downturns: low-volatility, dividends, and defensive sectors:

Temper Volatility

All stocks are volatile to some degree, but some have been less volatile historically than others. Mutual funds and exchange-traded funds (ETFs) labeled “minimum volatility” or “low volatility” are constructed with an eye toward managing volatility.

One commonly used measure of a stock or stock fund’s volatility is beta, which is typically published with other information about an investment. The stock market as a whole (represented by the S&P 500 index) is considered to have a beta of 1.0. In theory, an investment with a beta of 0.8 might experience only 80% of market gains during an upswing and only 80% of losses during a downswing — and thus would…

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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 22 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

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