A systematic guide to selecting stocks designed for capital preservation and stable, long-term growth. Learn to identify resilient companies, reduce downside risk, and construct a portfolio built to weather market cycles—all through a visual, intuitive framework.
A strategic approach focused on preserving capital, minimizing drawdowns, and achieving consistent long-term growth—no matter the market climate.
The primary goal is to minimize the risk of losing capital during market downturns.
Defensive portfolios aim to fall less than the market during recessions.
Accepting modest gains in bull markets for a "smoother ride" over the full cycle.
Defensive investing begins in sectors with inelastic demand—where consumers continue spending regardless of economic shifts.
Essential goods like food, beverages, and household products with consistent demand.
TYPICAL DIVIDEND: High & Stable
Non-discretionary spending on pharmaceuticals, medical services, and insurance.
TYPICAL DIVIDEND: Varies Widely
Essential services like electricity, water, and gas, often operating as regulated monopolies.
TYPICAL DIVIDEND: Highest & Stable
Focus on companies with strong vital signs. These metrics help identify businesses that are reasonably priced, financially sound, and shareholder-friendly.
Shows the percentage of earnings paid as dividends. A lower ratio is safer and more sustainable.
Measures financial leverage. A ratio below 1.0 indicates a company has more equity than debt.
How much investors pay for $1 of earnings. A P/E below 25 is often a good starting point for defensives.
Reported profit (Net Income) can be misleading. Real cash generation (Free Cash Flow) is the true sign of a healthy business. A company where FCF consistently tracks or exceeds Net Income is strong. When FCF falls while profits rise, it's a major red flag.
Build a robust long-term portfolio using this actionable framework—no clutter, just clear execution.
Clarify your risk tolerance, goals, and timeline. These inputs shape all future decisions.
Filter for large-cap stocks in defensive sectors with stable earnings and healthy balance sheets.
Study financials, cash flow, and management commentary. Confirm consistency and resilience.
Diversify into 10–20 names across sectors. Cap position size to limit downside risk.
Review holdings quarterly. Rebalance annually to maintain exposure discipline.