Risk markets seem to be back to their old tricks. After a few months of what appeared to be much steadier forward progress during the first quarter of this year, equity markets have seen a noticeable increase in volatility.Last Tuesday, the Dow Jones Industrial Average for example fell over 170 points in the morning on the heels of a three percent stock market drop overnight in Europe.In the following days, markets snapped back on mixed news coming from both sides of the Atlantic.The VIX index of market volatility ended its steady decline about a month ago and has since been rising again.In these days of often conflicting information pushing markets sharply in both directions, it may be a good time to revisit your fundamental investment strategy.As mentioned in a previous article here, establishing and staying with an investment discipline is critical to constructing a comfortable portfolio designed to ride out the big swings in the market and produce steady results over time.And while a portfolio’s strategic asset allocation is important to meeting longer term objectives, a predefined set of tactical, or shorter term tools can also be useful for navigating choppy markets and actually profiting from the day-to-day volatility.Those of you who attended this past week’s LOM Market Outlook luncheon will know I have been advocating the ‘tactical 3 Ds of investing in the coming months: Defensive, Dividends and Dollars.We favour being defensive in structuring portfolios, emphasise dividends as a way to ‘get paid while you wait’ for the global economy to eventually improve and are keeping currency bets in US dollars followed by Australian and Canadian dollars while steering clear of euros for now.At the luncheon we explained our rational for slowing global growth.Although the International Monetary Fund (IMF) tweaked up their global growth forecast to 3.5% earlier this month, the latest estimate is still far short of the 4.0% predicted by the agency just last September.Even China, a major growth engine of the still nascent global economic recovery in March forecasted their domestic GDP growth to slow to 7.5%, down from the 8.5% officially projected before.Slowing growth points us to less “cyclical”, or economically sensitive sectors of the market.Traditionally, consumer staples companies such as Kimberly Clark, electric utilities and healthcare companies fare best in this type of an environment.The next ‘D’ to consider is dividends.While offshore holders are systematically clipped on stock dividends with up to a 30% withholding tax, the after-tax yield on some of the highest payers is often much higher than the yields on bonds of any reasonable credit quality.For example, at the time of this writing the ten-year US. Treasury bond is paying just about 2% while many high quality dividend-payers are cranking out 4% or more.Moreover, income on a bond never increases whereas a well-managed company should have the capability to increase the dividend each year and provide a least some chance of a hedge against inflation.And last but not least, currency is a vital consideration for globally-positioned clients as well as Bermudian residents.The big question of today is which governments can be trusted to support their currency value when all of the major world powers seem resolute on printing money to bail out their past missteps?This might be a difficult question to answer at the moment, but clearly some will do a better job than others.For the year ahead, we think the greenback, which has been gaining a bit of traction lately, is a solid bet, at least for the next few months.America’s recovery path, bumpy as it is, seems to be stabilising faster than the patchwork plan being implemented by Europe.The US unemployment rate peaked at just over ten percent in October of 2010 and has been falling steadily since.On the other hand, Europe’s unemployment continues to tick up reaching 10.8% in the latest report up from 10.2% a year ago.Overall, we prefer the US dollar versus the euro but our next best bets are the Aussie and Canadian dollars.Bryan Dooley, CFA is a portfolio manager at LOM Asset Management in Bermuda specialising in the areas of portfolio management, investment strategy and quantitative process.This article is for information purposes only and is not investment or financial product advice and is not intended to be used as the basis for making an investment decision.