You are a portfolio manager for a $500 million stock mutual fund. The majority of your research information predicts a downturn in the market soon. However, you remain bullish for the long-term. You know that all too often, when the portfolio declines in value, the redemptions significantly increase. What alternatives do you see? I need a different answer from the one post on this site!! The answer already available to the student:
"The best way to insulate a portfolio against risks of downturn/ crash etc is to have a well-diversified portfolio. It implies a balanced mix of stocks, bonds and commodities depending upon the risk return analysis, future trends and one’s own preferences.
Next is periodic rebalancing so that market changes are reflected in the choice of investments.
The timing of selling/ buying is crucial to maximize profits and minimize possible losses."