Is it time to play defense with your investments? An investment strategist said that plan works anytime, regardless of the economic climate.
Recession-proofing your portfolio starts with a two-step stock evaluation said Dr, Joseph Belmonte.
"Which are the stocks that are growing the fastest, and have the highest return on their equity and the highest-growing earnings? And then from that, we look to which are the defensive stocks," said Belmonte.
Belmonte said "defensive stocks" outperform Wall Street, even on down days like when the Dow tumbled 800 points earlier this month.
"That was a 3 percent drop, and some of the stocks, like AutoZone and O'Reilly [Auto Parts], well, AutoZone dropped 1 percent while the market dropped 3 percent, and I know this is a very short period of time--it was one day--but still, we look to those stocks, and those are the stocks that people are selling the least," said Belmonte.
Belmonte added the defensive stocks, which also include McDonald's and Dollar General, outgain the market in good times--for example, over the past five years, while Wall Street posted an overall gain of about 50 percent.
"AutoZone was up 100 percent, O'Reilly was up 140 percent, McDonald's [was] up 140 percent, Dollar General up 140 percent..there seems to be a theme there," said Belmonte.