1) Become a trader. Probably the single most expensive idea for investors. Some think they can make a quick buck by trading the market, catch a few points here and there, and blammo, before you know it, they'll be back even again. Trading is not what investors should do. It takes a totally different mind set and requires more time intensive study of the market. If you really think you can make fast money by trading, take just 5% of your portfolio and see where you are a week later. Better yet, don't try this at all. You'll simply lose more and feel even worse.
2) Short stocks. After all, many investors reason, the market has been going down. They think their stocks in particular have been hit even harder than most others. Doesn't it make sense to go with the trend and short these losers? No it doesn't, in most cases, for two reasons. One, most of the damage has been done to the worst stocks. Unless there are some major surprises such as even lower orders than expected, most stocks have adjusted to the new reality: slower growth for the next six months. However, that can change in one press release and not only will the stock that has the good news go up, but so will all the stocks in the group and the suppliers to that industry.
Two, shorting stocks requires just as much research as buying a stock. The image of a gunslinger coming in every day and shorting a stock because he's got a certain feeling about it is pure fantasy. The best short sellers in the market are the most knowledgeable about the companies because they know that there is no limit to the losses you can take from shorting a stock.
3) Sell your losers and buy the stocks that are hitting new highs. Many investors just give up on their stocks and with great hope, buy another set of them. This is almost always the time when the losers start to move up and the winners start to get hit by profits. A great example of that recently was the financial industry. Many banking stocks were hitting new highs as most industry groups were going lower. Then one day, a brokerage firm said that's about as high as they're going to get and the whole group lost about 20% in a matter of days. If you had sold your tech stocks and bought the financials before that brokerage announcement, you would have simply added more losses to your portfolio.
4) Give up and go into cash. If you had done this 15 months ago, you would have been a genius but now is not the time to get into cash. In fact, it's exactly the wrong moment to be in cash. While it's hard to watch your investments go down, remember that when the psychology changes, the great stocks that have been battered will lead this market on the up side, and they will move dramatically. Don't ever try to time the market's moves. It can't be done. Besides, if you're an investor, you should have a long term horizon and understand that markets go up and down. Right now we're in the down part of the experience.