Five More Ways to Handle Market Stress

2. Make Necessary Tweaks

Those all-star investors mentioned above are not sitting idly by. As growth and value investors they will be looking for opportunities and will be restructuring their portfolios during these times. Most are primarily long only and some have limited short capabilities. They know that bear markets turn into bull markets and that patience will be rewarded.

Here are some recent investment tweaks that I have made.

I was long Amylin Pharmaceuticals (AMLN Quote) for some time. Some of my purchases were at lower prices, while some were higher. The stock has run into a recent issue with deaths linked to the company's Byetta diabetes drug. The Byetta LAR formulation, an event that I was awaiting, has been delayed further into the future and may be in danger of not even occurring at all. Bottom line: I sold my Amylin.

On the other hand, I have become more aggressive (since late July) in the restaurant and food services sector. In my opinion, the domestic economy will improve and commodity prices for energy and food have topped in this current commodity cycle. So, over the past several weeks, I have bought names like Yum Brands (YUM Quote), Panera Bread (PNRA Quote), Dr. Pepper Snapple (DPS Quote) and Darden (DRI Quote).

While I see timely value in this sector, please note that after a huge run, I recently sold my Buffalo Wild Wings (BWLD Quote).

3. Know Thyself -- As an Investor

Following up on point one, if you are a growth or value investor (or a hybrid of both), don't change your investment style just because the technicians are telling you that "the charts are breaking down."

I am not here to belittle technical analysts. However, I think the divergence between value analysis and technical analysis can be summed up by Warren Buffett, who is quoted as saying, "If a business does well, the stock eventually follows" and "if past history was all there was to the game, the richest people would be librarians."

Technicians would say that a stock's price history will dictate future stock movements. Clearly there is a clash of these two styles. Both cannot always work at the same time. When they do work together it is a moment of trading and investing ecstasy. However, if you switch styles now, you might find yourself in another predicament when your old style works after you've abandoned it.