What are defensive investors? What strategies do defensive investors use?<\/p>\n\n\n\n
Defensive investors are people who want to avoid spending too much time on investing. They want to make money but maybe aren’t as concerned with huge returns.<\/p>\n\n\n\n
Read more about the principles and strategies of defensive investors.<\/p>\n\n\n\n\n\n\n\n
What’s the defensive invetment style? <\/p>\n\n\n\n
Defensive investors<\/strong> want to avoid spending too much time on investing. They like simplicity and don\u2019t love thinking about investments or money. Their goal is to perform on average in line with the market, and to avoid serious mistakes. <\/p>\n\n\n\n We\u2019ll cover how the defensive investor should invest, both from a philosophical point of view on how to behave and a tactical point of view on what stocks and bonds to buy.<\/p>\n\n\n\n Graham\u2019s recommendation is to split investments between stocks and bonds. The default split is 50-50 between stocks and bonds<\/strong>. This allows you to participate in both the gains of stocks as well as the relative safety of bonds. This is a solid defensive investment style. <\/p>\n\n\n\n At times, you can shift your balance in favor of stocks or bonds. If you feel stocks are overpriced and due for a downturn, you can shift your investment to 25% in stocks and 75% in bonds. Likewise, after a steep market downturn or when stocks are cheap, you might shift to 75% in stocks and 25% in bonds. But Graham advises no more than a 75-25 imbalance.<\/p>\n\n\n\n Why is this? Why not put 100% of your investment into bonds? <\/strong>Three reasons:<\/p>\n\n\n\nHow Should They Invest?<\/strong><\/h3>\n\n\n\n