What you can do right now

In normal times, the best advice I would offer after any market decline is "don't be afraid." But these are not normal times, and anyone who is not afraid after a drastic drop in the markets and the prospects of very long and slow recovery is, frankly, deluded. The trick is to step back and consider your real options – those that represent sensible moves to secure your positions and improve the prospects for your financial future. That is the wise course to take.

Instead of big impulsive steps you may regret later, you should take small and careful steps that will make you feel you have taken charge. Mental-health experts have found that merely believing you have some control over a painful situation is enough to make the pain more bearable.

At a time like this, taking a little bit of action can give you a lot of comfort -- both as an immediate salve for your market wounds today and to make your portfolio more solid in the years to come.

For investors, that means being deliberate in everything you do and making sure that all your decisions are gradual and incremental, rather than sudden and drastic. Call it "smart panic" -- calculated actions that free you from the chains of inertia without compelling you to go haywire.

Normally, inertia keeps investors locked into all their investments, good and bad. As Sir Isaac Newton might have put it, an investor at rest stays at rest, and an investor in motion stays in motion, unless acted upon by an outside force. Severe losses can shock any investor out of inertia, often in destructive ways.

But there are strategies that can help cope with the downturn in our personal finances. Some of these you need to do right now, even before you put together a new plan for your later years.