A conservative investment mix includes a concentration in less risky investment options, such as bonds or income stocks . Lower risk investments offer less risk of capital loss , but historically have produced lower long-term returns. Buying securities cheaply when other investors are pessimistic and selling securities early when other investors are optimistic. A bond or a preferred stock that may be exchanged for a specific number of common shares at any time, depending on the terms established when the security was purchased. A period of sharply declining stock prices during a bull market .
Taxes are due on the difference between the investment's cost basis and the sale price.
For example, the auto industry is considered cyclical because its earnings tend to fall when the economy slows. Food and drug stocks are generally considered to be non-cyclical, because needs for food and medical care tend to remain constant.