If you're thinking defensively, there are a few things you can do.
One, the safest stocks in a down turn are the defensives. They make up about 20% of the Australian market. Defensive Sectors are: Health, Telecoms, Utilities, Consumer Staples.
In serious down turns, they will still go down - just not as much as the cyclicals.
The ultimate defensive is to put some money into cash.
Other defensive actions are, first, looking to bonds. There are two bond ETFs on the Australian market that I know of. IAF and RGB. These can also be played through a managed fund. I have some money in a Bond Managed fund which is up about 9% this year while the XJO is down currently for the year about -2.5%. Having money in both provides a diversified/defensive strategy.
Another strategy is to diversify into overseas stocks. IOO is an ETF that does that. It's up about 8% this year.
Another strategy is to hedge the Oz Dollar by putting some cash into the USD etf on the Australian market. It's up about 7% this year.
Another strategy is to sell call options on stocks owned. Don't do this when stocks are already well oversold as they are now.
POG in U.S.$ runs largely independently of the SPX - it is a wild card.
POG in Oz $, as I've mentioned earlier, is a good hedge in times of recession. It is largely a play on the falling Oz$ against the US$.
Most of these strategies require tinkering with a diversified portfolio - which itself is a defensive strategy - but switching between different groups of assets might be worth a thought.
Punting on particular stocks, particularly small caps, as a defensive strategy takes a lot of skill.
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