When the markets crash, your nest egg goes splash and you wish you had cash, that's a bear market. Sadly, most investors spent the summer watching portfolios shrink and blue chips sink as money retreated from Wall Street. That, my friends, is the downside of investing.

If you're in the market for the long term, here's what to do seek the advice of people, like the authors below, who've weathered the storms. Most will recommend that you diversify, diversify, diversify. Then, hold tight, remembering that a diversified portfolio will share in the gains when the bulls return to Wall Street and in the meantime, your money will be far less likely to smash, crash or splash.

Common sense reigns I know these first guys well. From their days as the hip" investment advisors on AOL to their current monopoly on common sense in the financial world, the Gardner brothers preach a sensible, stable approach to personal finance and investing. So I wasn't surprised to find that The Motley Fool's What to Do With Your Money Now: Ten Steps to Staying Up in a Down Market by David and Tom Gardner (Simon ∧ Schuster, $23, 212 pages, ISBN 0743233786) mimics the no-nonsense advice they dispense daily on their Web site, on TV and radio and in their news column. What's new in this book is the Gardners' self-deprecating ability to use their own flops as examples of what's wrong with investing" right now. They admit to financial and business-building mistakes, offering personal examples designed to keep you from taking the wrong turns in your own portfolios. This is sage advice from Fools.

Time to learn Safer Investing in Volatile Markets: Twelve Proven Strategies to Increase Your Income and Financial Security by Carolann Doherty-Brown (Dearborn, $18.95, 288 pages, ISBN 0793151481) is a straightforward guide to understanding the strategy and timing issues most financial advisors and stock brokers use to advise their clients. Knowing how long you will hold and then sell a stock is as important as understanding a company's P/E ratio or its audit practices. Knowing what your broker knows, and how he should react to market trends, is insurance for you and your portfolio. In the long run, the smart investor survives by being educated about all the issues at work in the markets. As Brown says, my 12 strategies will not work all the time for all people, but history has shown they do work most of the time." Follow her lead for long-term growth and an escape from the roller coaster markets.

Is it a stock or a bond? Most people don't know the difference between stocks and bonds. Over the years, I've encountered many investors who just think bonds pay less" than stocks. So I'm delighted to report there's finally a book that shows how this integral part of a portfolio works. The Money-Making Guide to Bonds: Straightforward Strategies for Picking the Right Bonds and Bond Funds by Hildy and Stan Richelson (Bloomberg, $26.95, 304 pages, ISBN 1576601226) delivers a wealth of information on what bonds are, how to pick bonds and how to plan bond investing. Bonds should not be trendy additions to portfolios in bad times, the authors argue, but a well-thought out portion of any serious investment or retirement plan. Get off the bubble Bubbleology: The New Science of Stock Market Winners and Losers by Kevin Hassett offers an interesting and timely look at why stock market prices rise and fall and how group psychology intersects with finance. Recent market reactions would make any investor wonder are we all a group of untrained lemmings rushing toward the cliff? Hassett, an economist and frequent contributor to The Wall Street Journal, argues that traditional ways of assessing a stock's inherent risk (equating it with volatility) are flawed. He offers a set of simple principles to explain why investors panic when they see a bubble" or steep rise in the markets and what you can do to profit from the market's overreactions to bubblespotting." A timely book, yes, but one that teaches long-term approaches to investing and offers interesting insight into the mind of the market.

 

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