{"id":9955,"date":"2010-06-03T20:25:47","date_gmt":"2010-06-04T00:25:47","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=9955"},"modified":"2010-06-03T20:25:47","modified_gmt":"2010-06-04T00:25:47","slug":"defensive-stocks-are-they-the-ticket-in-a-downturn","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/06\/03\/defensive-stocks-are-they-the-ticket-in-a-downturn\/","title":{"rendered":"‘Defensive’ Stocks: Are They the Ticket in a Downturn?"},"content":{"rendered":"

In a severe sell-off, 99 percent of ALL stocks can fall.
\n<\/span> <\/span><\/h3>\n

By Elliott Wave International <\/span><\/h3>\n

Approximately three out of four stocks go down in a bear market. This ratio doesn’t just apply to high beta names; historically, 75 percent of all<\/em> stocks go down when the general market falls.<\/p>\n

Considering we could be headed into a severe <\/em>bear market (read Bob Prechter’s latest special two-issue Elliott Wave Theorist<\/em><\/a><\/strong>, if you haven’t yet), we could see more than 75 percent of stocks take a dive. In that case, even a basket of “defensive” or “quality” names isn’t likely to help your portfolio. What good are dividends when you’re losing far, far more through capital depreciation?<\/p>\n

On May 20, when the DJIA lost 376 points, 497 out of the S&P 500 stocks ended the day lower. (In other words, 99 percent of stocks fell.) Yet a financial television host recommended “defensive” names the day after. Wouldn’t his viewers be better served if he said, “You may want to step aside for now”? Apparently, stocks of one kind or another must<\/em> be recommended — no matter what the market is doing or is expected to do.<\/p>\n

Read Part One of Robert Prechter’s Latest Two-Part, April-May Theorists<\/em> FREE<\/strong><\/a>
\nThe April-May Theorist<\/em> series entitled “Deadly Bearish Big Picture” reveals a lucid picture for 2010-2016. It’s the flipside of Robert Prechter’s February
\n2009 forecast for a “sharp and scary” rally. Click here to download the 10-page part one for FREE now.<\/strong><\/a><\/p>\n

How about “quality” stocks that don’t fit the “defensive” category, like blue chips or major technology names? The 1973-1974 bear market provides a clue. The “nifty fifty” stocks were “glamour” stocks; pundits said the “nifty fifty” should “be bought and never sold.” However, by the time the bear market bottomed,<\/p>\n