Here are tips to survive the up-and-down stock market

CLEVELAND, Ohio -- Six months ago, investors were nervous about China, oil prices and interest rates. The stock market fell 6 percent in one week.

Today, investors are nervous about China, oil prices and interest rates. The stock market has fallen 8 percent since New Year's Day.

Second verse, same as the first.

The whipsaw of the markets has caught our attention, particularly on Wednesday, when the Dow Jones Industrial Average was down at one point by more than 550 points. Yes, the Dow was above 18,000 last summer, and now it's barely at 16,000. But unless you're retiring this month and you had all of your money in stocks, you shouldn't panic.

Try these tips on how to ride out the market storm:

Relax and re-evaluate.
"Take a deep breath and turn off the TV (namely CNBC), then re-evaluate where you stand in relation to your financial plan," said Elizabeth Scheiderer, a certified financial planner with NCA Financial ^[1] in Mayfield Heights. "The last 22 days, most likely, has not thrown your long-term goals out the window, as these periods of volatility (both up and down) are regular occurrences in the market."

Keep your perspective.
"People always over-estimate the current financial situation or crisis," said Akron certified financial planner Jesse Hurst, who is co-founder of the Millennial Group ^[2].

"I have been doing this since 1987 and this is at least the 10th time the 'End Of The World' was reportedly coming according to investors," Hurst said. "The resilience of the U.S. economy and markets is amazing and has always stood the test over time. The four most dangerous words any investor can say are: 'This time is different.'"

Remember ups and downs are normal.
The market goes up and it goes down. That's what it does. And drops of 10 percent occur every 18 months on average. We saw a 10 percent decline last summer, the largest in four years. We haven't hit a 10 percent drop this month -- yet.

Close your eyes.
If you haven't looked at your 401(k) or investment balances recently, don't look now just to see how much you lost in the last few weeks. It's a good idea to look at your accounts at regular intervals, maybe every three months or every six months. But just because everyone is talking about the stock market now doesn't mean you should pull your account up now. That could really be depressing.

When you do decide to look at the numbers, make sure you look at the big picture, such as how much you've gained over the last few years. Consider this: The Dow is up 36 percent in the past five years -- since Jan. 22, 2011.

And if you do check on your balance now and the markets continue to be volatile in the next several weeks, don't check your balances every day. Obsessing isn't good.

Remember what Warren Buffett says and go shopping.
"Warren Buffett ^[3] is the most admired and least emulated investor out there," Hurst said.

In the teeth of the financial crisis in October 2008, Buffett wrote an op-ed piece that ran in the New York Times that said people should be buying stocks, since they were on sale, Hurst said. "That's what he was doing, and it went completely against the grain and psyche of where most American investors were at that point in time."

Indeed, stocks seem to be the only thing that Americans don't like to buy when they're on sale; they often would rather buy stocks when they're expensive and sell them when they're cheap.

Resist selling your clunkers.
You may be tempted to sell off the investments that have lost a lot, but if you do, you're locking in those losses. Resist that urge to sell, at least right now. Unless you really think they're going to continue to tank in the short term, wait to sell your dogs until they've come back a bit.

Check your asset allocation.
Only you, perhaps with some advice from a financial adviser, can decide how your money should be divided among different types of investments, large-cap, small-cap, bonds, etc. Age is a big factor in what choices you should make. That said, here's what a typical investor might consider a solid portfolio:

40 percent to 50 percent in large-cap funds or stocks.
20 percent to 30 percent in mid- and small-cap funds or stocks.
10 percent to 15 percent in international funds or stocks.
10 percent to 15 percent in bonds (preferably both government and corporate bonds).
If you have no idea what you're doing, this could be a starting point. You should shift things to fit such factors as your tolerance for risk, your years until retirement and your overall assets.

The idea behind diversifying your assets is the hope that not everything will be down at the same time. If you're worried about riding out this particu lar storm, then you probably were not properly invested before this downturn started.

Work with a financial planner.
Working with a certified financial planner can help investors consumed by uncertainty. "This will take the 'worry' and 'fear' of the unknown," Scheiderer said, and help people feel confident they know where they stand, know they have a plan and know what they need to do in the future.

Re-balance.
Assuming that some of your holdings are up and some are down, your asset allocation may be out of whack right now and it may be a good time to re-balance, Scheiderer said. Most professionals recommend re-balancing at regular intervals without regard to the headlines. Maybe it's every six months. Maybe it's every year. But stick with your timeline.

Take it easy.
If you realize that your investments are seriously out of balance now, for whatever reason, then you should re-balance. But don't do it all in one day. Most 401(k) plans have online tools that allow you to recalibrate with just a few keystrokes.

If your percentages are way out of line, you should consider re-balancing gradually over a period of weeks or months. Or you can just decide to shift one-third of a particular investment to another investment once a month for three months.
Likewise, if you decide to go shopping for stocks, you should put money in gradually. The old standby rule of dollar-cost averaging dictates that by spreading out investment purchases or sales over a period of time, you're protecting yourself against big swings in a short period. Think if you'd put a bunch of money in the market on Tuesday and then got walloped on Wednesday.

Look for some safe bets.
If the economy is going to be hiccuping or worse for a while, you should look to put some money into some hedge bets, such as consumer staples like food or non-food groceries, healthcare, utilities or any solid dividend-paying stock. (The beauty of dividend stocks: They pay shareholders income even when the share price is down.)

Take action if you're near retirement.
If you are within five years of retirement, you should not have all of your money in the stock market. Period. If there is a big correction, you might not have time to recover. And you always want to have money that you'll need in the next five to eight years in lower-risk investments.

Do nothing.
Hurst noted that this is another piece of advice from Buffett ^[4]. "Sometimes doing nothing, when it's the right thing to do, is one of the hardest things for people, who during a current time of economic pain want to take action, usually the wrong action, to alleviate the short-term pain," Hurst said. "Today is no different."