Don't Count On Dividend ETFs To Play Defense | Seeking Alpha

Don't Count On Dividend ETFs To Play Defense | Seeking Alpha



This is an excellent article about what works and what does not work in bear markets and downturns.  The author showed charts of how dividend ETFs and the S&P 500 fared during the 2009 bear market and the severe 2011 correction.  The bottom line was that they all fell about the same.



However, the writer brought up defensive plans that will do well in downturns.  First, you need to have trailing stops on your stocks. Secondly, you can buy BIV, Vanguard's intermediate-term bond ETF. Third, you can buy XLP, the staples ETF which is composed of defensive stocks like PG and WMT.  The downside of XLP will be a lot less than the overall market.  So, it might be a good idea to allocate part of your portfolio to defensive tactics now in case we have a sudden severe correction or an outright bear market in the near future.