…consider trimming stock funds and adding to your short-term bond or cash positions.

That said, don’t overdo it. You need to be able to handle some short-term pain if you’re going to earn good long-term gains.

6. Sell your long-term bond funds…

…as well as Inflation-Protected Securities and consider a high-yield fund. Junk bonds may have further to fall, but you’ll never call the bottom, and this could be a good time to begin building a stake here.

Remember, however, the fund has a 1% back-end load in its first year, so if you're not committed to holding on, you might want to consider a high-yield ETF, if you can find a good one.

7. Make sure you aren’t overweighting small-cap stocks.

The best values right now appear to be in the large-cap and mid-cap arenas. I’m partial to the PRIMECAP Management team. If you can add to positions in their Vanguard funds, do so. I’ve added to my personal holdings three or four times already this year.

8. Don’t measure your portfolio performance from its absolute high.

This is the error more investors make than just about any other.

If you’d known it was going to be the absolute high on that day you’d have sold out, right? Markets go up and down.

Look at how you’ve done relative to a benchmark like Total Stock Market or, if you’re really conservative, Balanced Index. If your longterm performance has been solid, stick with your strategy.

9. Stop and smell the roses.

If you’ve been following my advice over the years that you should invest in some of the best actively managed and indexed funds at Vanguard, then you’ve done darned well, thank you very much. You’ve handily outperformed that market and done so with less risk.

Having a lousy month or quarter? So what? Investing is a marathon. Leave the sprinting to those hedge funds that seem to be blowing up daily. We’re doing just fine.

As good as Vanguard is (and I have most of my family’s money with them), the fund family has a lot of "secrets" that they keep under lock and key. Accept a risk-free trial subscription to The Independent Adviser for Vanguard Investors, and ach month I’ll bring you independent and unbiased in-depth information on Vanguard funds, including the best funds to buy, advance warning of funds likely to close, changes in management, and much more. Sign up for your risk-free trial subscription right now by clicking here!