from Casey Research
Vedran here, filling in for David Galland today. Lately, I’ve been working on an interesting project, looking at stocks which could weather the next market crash. The good news is that there are stocks out there with low betas that fluctuate less with market movements. For example, if a stock’s beta is 0.5, one can expect it to lose only 0.5% when market loses 1% on the same day.
In regular market conditions, these low-beta defensive stocks will do their job. However, in my research, I’ve come across some troubling facts. If the DJIA drops 100 or even 200 points tomorrow, defensive stocks won’t get hammered as much as the market. With that said, in a full meltdown, no one is immune. The most defensive stocks will get sold off just as fast as any hot potato on the market. When all hell breaks loose, there will be no place to hide.