Second, avoid selling at a loss when the markets are down. It is far better for your nest egg's health that you ignore the headlines and only check your portfolio about once a year or so than that you look frequently at how things are doing, then sell in a panic if the news looks ominous.

Third, invest half your funds that are allocated for U.S. stocks or stock mutual funds in the shares of safe, financially strong, profitable companies with relatively low price to sales ratios, and which have reasonably low debt to equity (for instance 0.66 or lower).

Here are four that meet these criteria now:

To assure greater safety along with a satisfactory total return, I prefer companies with low: price to cash flow; price to book value; price to earnings; price to sales; and debt to equity.

While it is just an option for easy application, one can overall keep 20% each of one's liquid assets respectively in money market or similar short-term reserves (a safe haven in case of a market meltdown, loss of one's job, etc.), intermediate term bonds or bond mutual fund shares, foreign assets/mutual funds, and the two above referenced U.S. stock/mutual fund categories. By periodically selling the higher portions of such an allotment of one's resources and buying more of the lower portions, one assures the basic rule of investing, to "buy low and sell high."

One's annual review and rebalancing (as appropriate) is also a good opportunity for analyzing which stocks or mutual funds to retain and which to replace. Are one's purchase criteria still applicable? If so, no need to make any changes.

If using mutual funds in taxable accounts, it is best not to buy new or additional shares shortly before major dividend or capital gain distributions, since they automatically increase the number of shares (which lowers the price for all of them), and yet one still owes taxes on the distributions as if one had had real gains.