A defensive stock is typically one which does not vary much with the ups and downs, or seasonal movments of the market. They are considered more stable than the ‘average’ stock, and can be contrasted with cyclical , or growth stocks, which tend to move more closely with market trends, and consumer buying habits.
A good example of a defensive stock would be AT&T, and two good examples of cyclical stocks would be Disney and General Motors.
A good long-term portfolio will be diversified with respect to these two tendencies: that is, it’s wise to balance one’s mix of stocks with cyclical, or growth stocks to take advantage of strong market growth, and more defensive stocks, to hedge one’s bets against downswings in the market.
Dollar Delight 