The Wall Street Journal argues that the stock market drop may have killed so many sectors that "defensive stocks" may have disappeared. In many market corrections, there are some companies with shares that have held up because their business are less likely to be hurt by a recession.
The paper says that "a number of defensive stocks lately are acting more like cyclical names." The analysts points to companies such as PepsiCo (NYSE:PEP) and Johnson & Johnson (NYSE:JNJ).
The viewpoint may be flawed. What may have happened is that there has been a rotation out of stocks that used to do well in bear markets to a new set of shares which have held up well.. Over the last year, shares of Wal-Mart (NYSE:WMT) are up over 20%. Shares in Colgate (NYSE:CL) are only off a little over 10%, but the company pays a 2.3% dividend. Shares in Genentech (NYSE:DNA) are up 20%. Granted, it is a takeover target, but it has been considered one for some time.
Maybe The Wall Street Journal is just looking in the wrong places.
Douglas A. McIntyre is an editor at 247wallst.com.
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