Stock Market Today

Defensive Stocks

Defensive stocks are the opposite of cyclical stocks: they tend to do well during poor economic  conditions. They are issued by companies whose products and services enjoy a steady demand. Food and utilities stocks are defensive stocks since people  typically do not cut back on their food or electricity consumption  during a downturn  in the economy. But although defensive stocks tend to hold up well during economic downturns, their performance  during upswings in the economy tends to be lackluster compared to that of cyclical stocks.

Tracking Stock

A tracking stock is a type of common stock that is tied to the performance of a specific subsidiary of the company. This means that the dividends and the capital gains for the stock depend upon the subsidiary rather than the company as a whole. Owning a tracking stock does not give the owner voting rights in the corporation, nor do owners of tracking stocks have a legal claim upon the general assets of the corporation. A company will sometimes issue a tracking stock when it has a very successful division that it feels is under appreciated by the market and not fully reflected in the company’s stock price.