The S&P/ASX 200 (INDEXASX: XJO) has dropped 1.2% today.
With just two trading days for the month left, investors are facing the prospect of market losses to the tune of approximately 5% in September!
The falls and increased nervousness amongst market participants is a reminder of the benefits of owning blue-chip stocks.
Case in Point
For example, the following three blue-chip stocks are holding up well in the face of the market sell-off.
Biopharma group CSL Limited's (ASX: CSL) share price has declined just 0.8% over the past 30 days, compared with a decline of 5.65% in the index.
Likewise, vertically integrated energy company Origin Energy Ltd (ASX: ORG) is down just 0.7%.
Meanwhile, the share price of pallet and container pooling firm Brambles Limited (ASX: BXB) has actually rallied in the past month with the stock gaining an impressive 4.1%.
The strong performance of these three companies highlights the defensive characteristics of their business models.
Prepare for a correction
The prospect of further market falls are real and could create attractive buying opportunities, however investors need to be ready to take advantage.
If a flight to safety sets in gold stocks should do well but arguably a better "all-weather" approach is to own high quality businesses which are not only a defensive play, but also attract the crowd as safe haven stocks.
Importantly, these blue-chips should remain liquid during a market correction which allows an investor to adjust their portfolio into more attractively priced stocks if and when the opportunities present themselves.
