How do you manage the portfolio when the market goes down - do you raise cash?

Our mandate is to manage equity portfolios regardless of market conditions and we do that by focusing on stock selection. As a result, we do not make short-term or tactical decisions to raise or deploy cash. Typically we are more active in purchasing securities after prices have fallen.

Given that one of our areas of expertise is valuation, however, and that valuation serves as an excellent indicator of long-term expected returns, cash levels may increase at times as a function of strategic decisions to limit exposure due to poor risk/reward environments . Conditions that would merit such actions include a dearth of attractive ideas, extremely high valuations for the market as a whole, and high systemic risk.