1. Since 1980 the average intra-year decline in the SP500 has been roughly 14%. 26 out those 34 years despite the average intra-year drop the market closed positive, 76% of the time. That does not mean that the declines were not painful, its just a reminder that the market goes UP and DOWN not up OR down. And, draw-downs are unavoidable, there is no sense in trying to avoid what cannot be avoided.
2. Its never been wise to be a bear for too long. In the last 89 years stocks closed down 20% or more 6 times (7%). 35 out of the last 89 years stocks delivered 20%+ returns, (39%). Try to minimize your losses but never forget that the real game is played on the long side.
3. When the market gets volatile less is better and a proven market timing system might be of tremendous benefit, this will keep you from jumping the gun. Investors Business Daily market timing system comes to mind. You can find this information daily in the B-section of the newspaper. What you want to be in the look for is when their market pulse goes from "market in correction" to "market in confirmed uptrend". I found that their market timing system works a lot better after corrections rather than when they are calling for a correction, no system is bullet proof.
4. Time is your best investment tool, better than RSI, sentiment polls, MACD, etc...Cut losses, live to fight another day.
5. Realize that there is a time to be aggressive and a time to just move a couple of pawns around just get a feel for the environment.
6. Stay thirsty, don't disengage.
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