The bull market inflated a lot of bank accounts and egos. But after a drop of more than 3,000 points in the Nasdaq, bond funds and humility are back in style.

Both professional and amateur investors are now trying to learn from their mistakes and avoid repeating them.

Last week, three well-known mutual fund managers shared a few important lessons they learned or remembered during the market's fall. This week, several readers pass on their own errors and epiphanies.

Live and learn.

Diversify, Diversify

Reader Matthew Scolforo's timing couldn't have been worse. "I have the distinction of being a person who entered independent stock buying in March 2000 with $10,000," he writes. "This month, of course, will go down in infamy as the pinnacle of nearly every stock known to man. As of this date, I have lost 95% of that $10,000. My picks at the time represented everything that was bad about the tech gluttony -- names like Palm ( PALM), Oracle ( ORCL) and JDS Uniphase ( JDSU). In my downward spiral, I have only served to give my broker a fair wage in commissions as I desperately searched for solid ground."

Scolforo ignored the most important rule of investing: diversify. The object is to build a portfolio of securities that won't all head in the same direction at the same time. Stocks and bonds. Growth and value. Tech and health care. These are a few of the combinations that will help you hedge your bets when the market gets rocky.

But Scolforo did do something right. He could have had a lot more cash at risk. And if you don't have a time horizon of at least five years, you shouldn't put your money in the stock market.

"My saving grace, of course, is my wife," he adds. "She has steadfastly refused to permit me to squander a penny more."

Another word of advice: Marry well.

John Lemandri ticks off the lessons he learned like items on a grocery list: Use multiple sources of information. Don't fall in love with a company. Rebalance regularly. Only invest what you can afford to lose. In all, Lemandri came up with a roster of 12 rules to invest by.

But his education came at an enormous cost. "I made and lost $2.6 million in three years," he writes. Part of the problem, he admits, was too much trading. "You should keep the number of trades reasonable, or your broker and not you will make the greatest gains."

One DRIP at a Time

Pam Biggs, on the other hand, has figured out a successful strategy to avoid trading too frequently. She uses dividend reinvestment plans, or DRIPs. Dividend reinvestment plans allow investors who own at least one share of stock in a company to automatically reinvest cash dividends, thereby accumulating more stock without using a broker. Many DRIPs also allow investors to purchase their initial shares directly from the company and to invest additional cash. They're great for investors who only have a small amount of money to invest.

But these plans looked antiquated and downright silly during the heady days of the technology boom. Many small tech companies didn't pay dividends or offer direct stock purchase plans. And investing through these plans would prevent you from trading aggressively.

For Biggs, however, that was part of the appeal. "I learned to watch the market slowly with DRIPs, read many books and stay diversified," she writes. "I have only had an online account for a year. I treat it very gingerly and have only made very small trades."

These plans do have their drawbacks: You'll have to enroll in several to build a portfolio of stocks. Some do charge fees. And if you're registered in numerous DRIPs, the paperwork can be a headache, compared with the relatively hassle-free alternative of opening a single brokerage account. You could end up with fractional shares, which are difficult to shed because only full shares can be sold in the open market. You also won't get up-to-the-minute stock prices, because DRIP shares are bought at regular intervals such as once a week or quarter. And you can't sell that stock with the click of your mouse either.

But if DRIPs turn you into a more patient, methodical investor, then they're a blessing. "I am a certified scuba diver and think of the market like the ocean," says Biggs. "It's lots of fun, but I have great respect for it."

Now that's a lesson to remember through the ages.
In keeping with TSC's editorial policy, Dagen McDowell doesn't own or short individual stocks, nor does she invest in hedge funds or other private investment partnerships. Dagen welcomes your questions and comments, and invites you to send them to dagen.mcdowell@thestreet.com.