An investor should strive to maintain a long-term perspective that aligns with his or her time horizon. This entails maintaining a strategic asset allocation throughout multiple economic cycles. The allocation should be designed to optimize long-term performance, and it should not be subjected to knee-jerk reactions and drastic changes.
That said, modest tweaks that capitalize on the current economic environment can be sensible. During a recession, it usually makes sense to increase allocations to the following assets: cash and cash equivalents, precious metals, investment-grade bonds and large-cap, defensive stocks.