During times of economic uncertainty, it helps to stay defensive. The thinking goes: Consumers will cut back on things they want — like a new gadget or sunny getaway — but they still need to spend on things they need —such as food, medicine and utilities.
But some defensive sectors are better than others. So don't buy in blindly.
The best performing sectors when growth slows are consumer staples and health care — by far. But the stats say that, for whatever reason, the telecommunication sector has underperformed in these scenarios. Though defensive, it's the biggest loser of all 10 sectors during slow growth.
Stocks have followed a similar pattern: It largely pays to stay defensive — with a few exceptions.
Food stocks General Mills, Kellogg and JM Smucker have outperformed the likes of Starbucks and Darden Restaurants. McDonald's, a cheap and quick food option, has also been a good bet.
And anticipating that consumers likely look for deals when cash is tight, investors typically push up shares of Wal-Mart, Ross Stores and Dollar Tree.