Protecting Your Portfolio in Uncertain Markets: A Defensive Investment Strategy Guide

When markets are uncertain, how should you protect your portfolio? Today I'm sharing defensive investment strategies with specific ETF and individual stock recommendations.

🎯 Core Message

If you might need money in 1-2 years, or want to minimize portfolio drops:

• Consider selling some tech stocks
• Review reducing growth ETF exposure
• Move to value stocks

Taking partial profits from assets that made you money over the past 3 years and moving to proven safe havens isn't a bad idea.

📊 Why Value Stocks?

Most investor portfolios right now are very tech-heavy. Tech stocks have delivered amazing returns over the past few years.

But in any of the three risks we discussed (rate shock, carry trade unwind, credit event), tech gets hit first.

Value stocks are different:

• Low tech sector exposure
• Cash flow-focused companies
• Dividend income provides downside protection
• Demand persists even in recessions

🏆 Recommended Value ETFs

SCHD (Schwab US Dividend Equity ETF)

Why it's good:

• Dividend growth companies
• Qualified dividends for tax efficiency
• Low expense ratio
• Proven track record

VTV (Vanguard Value ETF)

Why it's good:

• Pure value stock ETF
• Very low tech exposure
• Outperforming SCHD this year
• Vanguard's low costs

VYM (Vanguard High Dividend Yield ETF)

Why it's good:

• High dividend yield
• Large cap quality focus
• Heavy in defensive sectors
• Diversification benefits

💎 Recommended Individual Defensive Stocks

If you prefer individual stocks over ETFs, consider these companies:

Procter & Gamble (P&G)

Why it's defensive:

• Consumer staples company
• People buy regardless of economy
• 60+ years of consecutive dividend increases
• Strong cash flow

Walmart

Why it's defensive:

• Essential consumer retail
• Actually benefits in recessions
• Price competitiveness
• Stable dividends

Chevron

Why it's defensive:

• Leading energy sector company
• Benefits from geopolitical crises
• Strong dividend history
• Ample cash flow

Berkshire Hathaway (BRK.B)

Why it's defensive:

• Warren Buffett's diversified portfolio
• Massive cash reserves
• Exposure to various sectors
• Ability to buy cheap in crises

📈 Portfolio Rebalancing Guide

If Your Portfolio Is Currently Tech-Heavy

Phased approach:

1. Tech over 50% → reduce to 30-40%
2. Half of sold funds → value ETFs (SCHD, VTV)
3. Other half → individual defensive stocks or cash

Caution: Don't sell everything at once. Use dollar-cost averaging to spread timing risk.

Allocation by Risk Tolerance

Risk Profile	Growth	Value	Cash/Bonds
Aggressive	50%	40%	10%
Moderate	30%	50%	20%
Conservative	15%	55%	30%

⚠️ A Note on Timing

Don't try to time the market.

The reason to rebalance now isn't:

• Because you predict a crash
• But to manage risk

No one knows when a crash will come. But risk has clearly increased.

💰 Tax Considerations

Consider taxes when rebalancing:

• Taxable accounts: Capital gains taxes apply
• Retirement accounts (IRA, 401k): Rebalance tax-free

When possible, rebalance within retirement accounts first.

✨ Key Takeaways

Core principles of defensive investing:

1. If heavy in tech/growth, consider selling some
2. Move to value ETFs (SCHD, VTV, VYM)
3. Individual stock preferences: P&G, Walmart, Chevron, Berkshire
4. Don't change everything at once - phase it out
5. Use tax-advantaged accounts

Taking partial profits from 3-year winners and moving to proven value stocks is smart risk management.

We don't know when or how markets will move. But prepared investors achieve better outcomes in any situation.