The Hot Zone

[Time2Surf]

What's your investing recipe?

Here are four ways you can better control how you react in the face of any difficult market:

Don’t panic. Since 1900, the S&P 500 saw 35 declines of 10% or more. In the wake of those corrections, the index fully recovered its value after an average of about 10 months. Even the sudden drops in the past few weeks are well within the long-term norm. The more you fixate on the financial news, the more volatile and risky Wall Street appears.

Access your situation. Are you honestly prepared to withstand further decline? Are you well-diversified and prepared for a potentially bumpy road – or do you need cash near-term? Prepare yourself and your portfolio to keep from taking drastic action at the worst time.

Review expectations. We been in the midst of a seven-year bull market. Results like that are unsustainable and your expectations may have become unrealistic. A healthy correction can resync the market for further future gains – especially if you want to buy into the market yet held off because of the high (and ever-rising) prices of the long bull run.

Look forward. Stocks might of course drop, dive, stay flat, or even bounce right back. Two signs of strength in the U.S. economy have been job creation and housing. Unemployment stands at 5.1%, almost half the level following the 2008 financial crisis. Housing prices are rebounding. These are lagging indicators that have likely contributed to the markets’ strength over the past few years.