#defensive-stocks

#defensive-stocks

Consumer staples stocks generate reliable income, hold up during downturns, and tend to raise dividends even when growth slows. The iShares Global Consumer Staples ETF (KXI) packages that defensive logic into a single fund, holding 100+ global consumer staples companies with a 0.39% expense ratio and a 2.27% dividend yield.

With three consecutive double-digit return years in the market, many younger investors don't really know much else other than "market go up." Of course, for older investors who have lived through the GFC, dot-com bubble, or previous downturns in the 1990s or 1980s, it's not a straight line higher. And in fact, the longer of a stretch we go with valuation multiples expanding and the economy booming,

Mega cap tech stocks have continued to be the key growth engine for the U.S. economy. For many young investors that started investing after the great financial crisis, this has been the way it's been for as long as can be remembered. That said, the reality is that we're living in a much higher valuation environment today than we've seen in many years. And it's also true that over the very long-term, valuations will eventually revert toward some sort of equilibrium level.

Markets often rally in anticipation of rate cuts but then decline when the actual rate cuts are implemented. J.P. Morgan's trading desk recently warned that despite stocks setting "more than 20 all-time highs this year," the Federal Reserve's next rate cut "threatens to curb investors' zeal" through a potential "sell the news" drop. The S&P 500 is up almost 33% from its lows in April and is up nearly 13% for 2025.

In the face of potential tariffs impacting global trade, investors are gravitating towards defensive stocks as a safeguard against market instability.