21 ways to stomach a sour market

By rebalancing - or trimming some of your winners in order to buy more losers - you accomplish three things at once. You lock in profits on investments that are up. You force yourself to buy investments that are getting cheaper, even though all the market noise is screaming at you to sell. And you ensure your portfolio hasn't strayed from your long-term strategy and risk profile (see No. 9).

A persistent bear market can shift your strategy without your even noticing, says Bohemia, N.Y. financial planner Ron Rogé. A daring 80% stock/20% bond portfolio in 2000, for example, would have morphed into a stodgy 65% equity/35% bond mix by 2003 if left untouched.

How often should you rebalance? You can do it by the calendar - say, on a birthday or just before the end of the year - but it's better to establish a rebalancing trigger of about 5% in either direction. In other words, if your stock allocation should be 80% but falls below 75%, it's time. In fact, if you had an 80%/20% portfolio at the market high in October 2007, you're getting close to a trigger point now.

NEXT: Trim back on treasuries