2. Precious Metals. The SPDR Gold Shares ( GLD) has disappointed many gold bugs over the last eight months as the yellow metal has fallen 31% from its October 2012 high. Just this week it hit new 2013 lows and has not found a bottom quite yet. The iShares Silver Trust ( SLV) is another area of the commodities sector that has experienced even greater losses this year.

The precious metals sector has traditionally been a hideout for growth investors during times of volatility, but it is not showing a convincing pattern of stability right now. I am closely watching both GLD and SLV for a sign of trend or momentum change, however, I am not holding them as a safe haven at this time.

3. Short Position. Many of my followers know that I am not a huge fan of going net short the market. In my experience taking a one-sided stand against stocks has a much greater chance of failure than success unless you are a very short-term and disciplined trader. However, I can see the benefit in using a small short position to hedge off the risk of a correction in highly appreciated stocks that you don't want to sell.

This may include adding a broad based short ETF such as the ProShares Short S&P 500 ( SH) or the ProShares Short QQQ ( PSQ). Both of these ETFs will give you single-beta inverse exposure to large cap stock indexes. However, keep in mind that you should use a tight stop loss on these positions to manage the risk of a snap back rally.

I would caution those that are thinking about shorting interest rates right here using the ProShares Short 20+ Year Treasury Bond ( TBF). Bonds have already made a big downward move and I think that adding a rising interest rate fund at this point is very late to the game.

Areas of Safety and Strength

In rare times like these when we are seeing stocks, bonds and commodities fall in tandem, the best place to hideout may be cash. If you have already been proactive and raised cash in your portfolio, then you are ahead of the game and can start building your watch list for new opportunities that you want to purchase into this dip.

One area of the market for growth investors that are considering making sector allocation changes is regional banks. The SPDR S&P Regional Bank ETF ( KRE) has been remarkably resilient in the face of this equity selloff and may continue to outperform the rest of the market going forward. I don't currently have exposure to this ETF, but it is on my watch list for my growth clients as a sector that I am closely monitoring.

No matter how you end up playing this summer of volatility, I think it's important to keep in mind that the next six months are not going to look anything like the last six months. Keep your expectations for returns in line with the current economic conditions and adjust your risk tolerance to weather this volatility so that you come out on the other side a winner.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
David Fabian is currently a Managing Partner at Fabian Capital Management, a fee-only registered investment advisory firm specializing in exchange-traded funds. He has years of experience constructing actively managed growth and income portfolios using ETFs. David regularly contributes his views on wealth management in his company blog, podcasts, and special reports. Visit www.FabianCM.com to learn more.

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