TF,
Firstly, most of my positions involve being short call or put options, which are a partial hedge to a downturn. So, in that respect, my portfolio is a little less risky than an all-stock portfolio.
My 'Reserves' correspond to AIM's cash reserves, but they contain no cash or bonds. Because they cover many asset classes, they will not all go down together, or at least down to the same degree. The reserves also, in effect, have a stop loss, so that if we face a severe downturn, I will have a fair amount of cash to invest in cheap stocks at the market bottom.
Since, my overall thesis, is that we will see a continuing strengthening of the economy over time, higher interest rates, and further inflation in commodities, that's the way I'm investing. I'd rather put my money in stocks offereing potential for high returns, than to put them in bonds, which will be net losers over time.
I think the odds are with me, but as always, nothing is guaranteed, I monitor the markets every week, and am always tweaking the portfolio. My systems are only about 70% mechanical, and abut 30% discretionary.
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