Patience, Not Panic, for Long-Term Financial Security

3. Diversify

Volatility, with all its varying degrees and durations, is an inevitable part of market activity. During a downturn, it is tempting to make financial decisions based on headlines that fuel fear. When the Dow is heading too low for comfort, it would be wise to review your portfolio and re-balance it with a mix of stocks, bonds, and other securities. Spread out risk by investing in different asset classes. This may help offset losses in one sector and provide an opportunity for gains in another. Warren Buffet recommends index funds rather than stocks of individual companies.