When You're Tied Up in a Down Market

But resist the urge to get out of stocks altogether, the strategists said. You can, however, rebalance your portfolio so you have more in, say, fixed-income securities or U.S. government securities, said Jim Hardesty, president of Hardesty Capital Management in Baltimore. And don't fool with junk bonds, he said.

Now, what if you're a brave one? Hardesty and other strategists said now is actually a good time to look for buying opportunities. "If I didn't own stocks today, I would be an aggressive buyer," he said. "If I did own stocks, I would add to my positions now."

In these rocky times, it's hard to predict which sectors are safer than others. But some strategists interviewed offered suggestions.

Buy large-cap stocks, or shares of large companies, said Bernie McGinn, founder and chief executive of McGinn Investment Management in Alexandria.

He advises looking at pharmaceuticals because they are starting to hit rock bottom. Financials are still risky because they have not recovered from the mortgage crisis, he said. And he is also leery of energy stocks because they are so tied up in the price of oil. "It's basic economics. When things get expensive, people use less of it," he said.

Hardesty suggests looking at health-care-related stocks such as Johnson & Johnson. Some retailers such as Wal-Mart are performing well, and large multinational companies such as GE are not a bad bet, either, he said.

Hardesty also does not rule out some of the sectors most bruised by the credit crunch. Some financial companies that offer a variety of services, such as Goldman Sachs, will ultimately be fine, he said. And even a few housing stocks are starting to outperform the market, he pointed out.

Of course, each individual investor has to decide how much risk he or she can tolerate and go from there, the strategists said. If all this is too much for you and you just want to hold on to your cash, that might be the right move for you, but consider this: Inflation might be on the way, and if it gets here, it'll take a big bite out of your reserves.

"Cash has its own risks, and the erosion of purchasing power is one of them," Horan said.

That's not to say you shouldn't keep cash. "You need to have a fallback of immediate liquidity whether it's a line of credit or cash at hand," Keller said. "You have to have that because these are rocky times now."