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NEW YORK (TheStreet) -- Yes, stocks in China posted their largest daily drop in eight years on Monday. But the latest pullback doesn't mean investors should drop what they're doing and throw money into China.

The benchmark Shanghai Composite Index fell 8.5% on Monday. The longer-term selloff, which began in mid-June, was sparked by too many investors buying stocks on margin. The index is down 28% since its June 12 peak.

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Scott Wren, senior global markets strategist at Wells Fargo Investment Institute, said it's a mistake to just hold China stocks by themselves, given their volatility. "Don't look at China by itself," he said. "I don't think China should be a significant size of any retail investor's portfolio."

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Ian Winer, head of equity trading at Wedbush Securities, echoed that concern, and said he remains worried about the unprecedented government action taken to stop the bleeding in China stocks. Earlier this month, Chinese officials banned large shareholders from selling stocks for six months and suspended trading in half of its stocks. On Monday, a report from Dow Jones said China's state government will purchase various stocks, in an effort to stabilize its markets.

"I would recommend investors stay out of China altogether," Winer said. "The government has now gone into uncharted territory and even that didn't stop the current selloff."

Meanwhile, Mark Luschini, chief investment strategist at Janney Capital Markets, said investors should remain cautious for now, as it's unclear exactly what's taking place in the market at the moment. He also points to new data showing China's industrial profits fell 0.3% in June, after rising in April and May. "That's not exactly an inspiration for driving share prices higher."

Wren isn't against holding well-diversified funds that have exposure to China. "We want our clients to hold China as a diversified emerging market type of portfolio," he said. "If you're going to invest in China, buy a very diverse fund, whether it's an exchange-traded fund or some type of fund that has exposures to all types of sectors in China."

The iShares MSCI Emerging MarketsETF (EEM) - Get iShares MSCI Emerging Markets ETF Report fell almost 1.5% on Monday and is down 3.8% since the start of the year. Some 24% of the fund's holdings stem from China. The fund also has exposure to South Korea, Taiwan and India, among other markets.

Meanwhile, the worries in China pushed down shares of U.S.-listed Chinese companies like e-commerce giant Alibaba (BABA) - Get Alibaba Group Holding Ltd. Report, which fell 2.2%. Web services company Baidu (BIDU) - Get Baidu Inc. Report slumped 3.7%. Baidu reports second-quarter earnings after the closing bell Monday.