Faced with a bear market, the gut reaction of many investors is to pile into “defensive” sectors – global tobacco stocks beat general retail by 32 per cent last year. But discriminating among companies matters, too. In a bleak 2002, the best performing stock in each US sector outperformed the worst in its sector by 63 per cent on average using FTSE’s index. Avoiding blow-ups is critical also. The demise of Ericsson and Nortel jointly cut about one percentage point off global equities’ performance from their 2000 peak to trough.

Selecting defensive stocks means abandoning the bad analytical habits that have prospered over the past two years (fans of buy-out simulations, that means you). Instead, scrutiny of three factors may prove important.