Tom Forester, who has a stellar long-term track record and headed the only long-oriented stock fund to post a positive return in 2008, is again playing defense. But that doesn’t mean he’s shunning stocks — Forester still has about 80% of his fund in stocks.

“If you just stay in money markets, you might miss out when the market goes down, but you also miss out when the market goes up,” Forester tells InvestmentNews. “And once people go into money market funds, they never get out. … There has been too much volatility recently in the markets but we haven’t gone anywhere.”

Forester also uses S&P 500 put options to hedge his 40-stock portfolio, according to InvestmentNews. And some of his largest holdings are defensive dividend-payers, like Chevron and Altria Group. “Even though we’re fundamental investors, we still pay attention to the macro picture, and we’re a bit cautious right now because a lot of the large-cap companies get 30% to 40% of their earnings from Europe,” Forester said. “We want to be overweight the more-stable sectors like consumer staples, health care and utilities.”