Experts say: invest in defensive stocks

NB: I will often give examples taken from the Belgian market. That is because I know the market well and it has some interesting stocks like Euronav and Delhaize Group, noted in both Europe and America.

Netto, the Belgian magazine about money and finance, asked 13 Belgian analists and economists what their favourite stocks were. Apparently they all opt for defensive funds like Albert Frère's holding GBL, retailer Delhaize Group (with stores like Food Lion, Sweetbay and Hannaford benefitting from a rising dollar) and provider of cable television and broadband services Telenet. The reason is obvious: while stock markets soared in 2009, the coming period will be one of volatility.

Holdings spread their risk over different companies so they've got a buffer against high pitched stock price changes. Also, GBL aims at some sectors which will be crucial in the next few years: emerging markets (Lafarge) and energy (Total, GDF Suez). Finally, GBL also focusses on beverages (Pernod Ricard). Together with food and pharma, beverages remained somewhat behind in 2009. This is where Delhaize Group pops in: cheaply priced in comparison to Wal-Mart, Carrefour and other retailers. As said, Delhaize will also profit from a rising dollar. Pharma will profit from Obama's health insurance plans.

Telecommunication stocks can benefit from stable cash flows, so they should be a constant part of an investor's portfolio. Not the least because they yield huge dividends. Finally, prices in the service industry seem to floating. They grow with 3.3% on average each year.

Other top stocks on the Belgian market are Bekaert, Tessenderlo and Nyrstar. These are cyclical and will jump when the economy expands.