Financial Advisers Urge Investors to Chillax

If you just can't stomach the stock market, allocate your new contributions to the fixed-income portion of your 401(k) plan. You may miss out on a rebounding stock market, but you'll probably sleep better knowing your cash is relatively safe.

Are there any good companies in the market?

Absolutely. "As long as you aren't speculating and getting too risky, there are a lot of low P/E, high-dividend, leadership companies out there," says Michaels. He notes that companies such as Chevron(CVX Quote), Johnson & Johnson(JNJ Quote) and McDonald's(MCD Quote) are good candidates.

What's more, many blue chips are still producing income for shareholders. "Companies such as AT&T(T Quote), Verizon(VZ Quote) and Coca-Cola(KO Quote) are still paying dividends," says Michaels. "Even if the Dow doesn't get back to 14,000, people can still receive their dividend income from those shares."

Are there any tax-planning moves I should consider?

Tax planning should never be your sole motivation for an investing move. Nevertheless, there are some steps you can take to cut your tax bill and boost your overall portfolio. For instance, you could sell shares of companies, such as Wal-Mart(WMT Quote), that continue to do well, and offset those gains by taking losses on other stocks.

You can then go back and repurchase the gainers you just sold, if you think they're still worth holding. If you're thinking about repurchasing the losers you just sold, however, pay heed to the IRS' wash-sale rules. According to the rules, your losses aren't tax-deductible if you buy "substantially similar" shares within 30 days before or after the sale.

"There are ways around the rule, though," says Tissot. "You can sell a mutual fund in order to harvest some taxable losses and then buy an exchange-traded fund that holds similar stocks."