Hedging Against Market Meltdown

Anticipating a tough year or years ahead for the stock market, I am now trying to manage my personal portfolio as a hedge fund, more specifically a small long-and-short equity type fund. The purpose is to hedge against a possible sudden market melt-down and, in more normal periods, to improve the overall return. My goal is to maintain a long/short ratio at a more-or-less constant level, say 70/30, but it will take some time to get there because most of my accounts are restricted (from shorting).

Chart above shows the historical performance of hedge funds (dark-green and blue) vs. $SPX (purple). Source: Credit Suisse/Tremont Hedge Fund Index. Note the lowered volatility, especially during the bubble-bursting years in early 2000s.