The gross domestic product (GDP) continues to decrease and many investors are left out on the battlefield with a dagger, only to be slaughtered by the ruthless, blood-thirsty market. It is time to let that dagger go and grab a shield. Recession proof, defensive stocks are the key to steady gains during a recession. They will keep you in the fight when all other options are exhausted.

So what is a defensive stock?
A defensive stock is a stock that preferably pays dividends, is stable through recessions, and immune to the business cycle. These can include, but are not limited to, food, drugs, utilities, etc. They withstand the up and downturns of the market because their earnings remain stable.

Another defensive sector that many overlook are video games. During a recession, people don’t have a lot of money to spend. Their minds, and wallets are both affected by the recession, but they still seek a form of entertainment to think about “something else”. Video games provide this outlet for many consumers as they are relatively inexpensive and they provide hours of enjoyment. Also, many games are played online now so it can be considered a social activity.

Hardcore gamers will not think twice whether or not they should buy that brand new video game. The recession plays no part in their decision making process. In fact, if they did lose their jobs and were tight on money, they would look for something to do. With a lot more time on their hands and boredom sinking in, they will actually go out and buy more video games than before. People need a form of entertainment when there is a recession and video games is the path they are taking.

ATVI (Activision Blizzard) has almost increased by 22% just this year. With titles like “Call Of Duty” and “Guitar Hero”, they continue to beat their predicted earnings reports. They will continue to make sequels for both of these games as long as gamers keep buying them.

Sources:
5 Stock Having A Great 2009
Jack Hough
SmartMoney March 11, 2009

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