Stocks can be divided into types that react differently to economic cycles. Understanding the difference is critical for portfolio balance.
**Defensive stocks**
Defensive companies include firms that provide necessities. Examples: Procter & Gamble, moderna forecast Johnson & Johnson, Coca-Cola.
Benefits:
– Lower volatility.
– Support long-term portfolios.
Risks:
– May underperform in bull markets.
**Cyclical stocks**
Cyclical companies depend on economic growth. Examples: Ford, Toyota, Delta Airlines, Marriott Hotels.
Benefits:
– Opportunities in bull markets.
– Profit during expansions.
Risks:
– Vulnerable during recessions.
**Conclusion**
A smart portfolio mixes stability with growth. For example, pairing Johnson & Johnson with Marriott allows investors to protect against downturns.
