By Kevin Grewal, Editorial Director at www.SmartStops.net

NEW YORK ( TheStreet) - 2008 was a devastating year for most investors who saw their investment portfolios diminish and dwindle down to unheard of levels.

All three major U.S. indices took a bath, with the Nasdaq leading the way dropping nearly 41%, followed by a nearly 37% decline by the S&P 500 and an approximately 32% drop by the Dow Jones Industrial Average.

With these large declines, the average investor thought that losing value in his or her portfolio was inevitable. Additionally, systemic risk took everything down at once with no safe places to hide. That ultimately led to portfolio rebalancing tactics being about as effective as rearranging the deck chairs on the Titanic.

As a result, many just sat around and debated on what to do, and the end result was that they didn't do anything. 2008, in effect, created a "graveyard market", where no one wanted to get in and no one could get out. Investors unfortunately found the commonly held practice of buy and hold doesn't work, as recent research suggests.

Consider the S&P 500. Over the past 10 years, the most diversified and well represented market index hasn't done anything and neither has the Dow Jones Industrial Average. In fact, if an investor bought the DIAMONDS Trust Series 1 ( DIA) in 1999 and held onto it, he would have a negative inflation-adjusted return as of today.

So how can an investor prevent this from happening and protect his portfolio. It is easy. It calls for you to have and follow an investment strategy, stay educated about the markets and not allow "gut" feelings determine which stocks to buy and sell and when to buy and sell these stocks.

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