It is very difficult to fix a damaged portfolio without realizing what went wrong; if not - another quick fix will only carry you to the next debacle.

In the case that nobody talks about it, it means that nothing really happening. So people are not worried. The statement that there are more sellers than buyers in a down market is not right. Actually there is a buyer for every seller. It's how eager the buyers are to buy or sellers are to sell, sellers are taking any price now while in today’s declining market the buyers are in no hurry.

You must clearly understand that it is necessary to pay attention to market cycles and get out while the getting is good. Of course it is easy to talk but not to do. Some would say that if you were within five years of retiring, switch to a more conservative asset mix.

It does not make any sense to putting arbitrary time frames without regard to the market cycle. You can follow a simple rule if market timing does not appeal to you either: take some profits off the table periodically, while you have them, and lock in the gains in some conservative vehicles. If you trade small caps you must know that each leg up in the market produces a new crop of leaders. Each time the market had an intermediate top, followed by a correction many of those leaders sold off too. In the case if you locked in your gains each time, you would have kept most of them and been largely in cash by now.

Such kind of situation should be a good lesson for the future, but still there is question: should you sell or not?

There are to steps to do in order to find the solution, the first one is to take charge of your finances and the second is to study.

You might agree that watching your retirement fund shrink is painful. But selling is what drives the stock prices down. It means if you sell, you will contribute to the decline and if you don't, others like you will drive the prices down anyway. Darned in both cases.

There is also another problem with selling now. It is all about that you might be selling at the bottom and bottoms are reached when everybody who wanted to sell has made it. So, if you sell at a loss, then, consequently, there are chances you will once again be too slow to get back in and that is another "buy high/sell low" cycle.

There is one solution - to reposition your assets. Such funds like DVM or UTF are yielding in excess of 15% and selling at a 15% discount to their NAV. Both offer a monthly payout. This could be your starting point. The assets are invested in the beaten down sectors: banks, REITs, utilities. Generally these sectors don't go out of business though they may still have casualties along the way.

Many companies increase dividends faster than inflation that’s why having the bulk of your retirement assets in dividend paying stocks creates a rising income stream. The main point is not to go after the highest yielding stocks but the ones that have a history of dividend increases.

Such funds produce profit around 6%. In this situation of a complete failure they are oversold. Even if you have to take a loss, you can lock in high monthly income for now and capital appreciation for later. So you shouldn’t expect the new funds to go up as soon as you buy them.

Read about 401 retirement plan and saving paper money from catastrophe with circulated silver coins.

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