'OK, we read about a bear market but what should we actually DO?'

That's the one sentence summary of a multitude of e-mails from readers after the recent interview with Monster Bear David Tice. Most readers feel, quite rightly, that bear actions such as selling short, owning gold, etc. are not for them. Indeed, although many were tempted to sell all stocks and hold cash, they worried that such extremes weren't the appropriate response.

And that's good.

Being an indecisive mugwump who avoids extremes isn't all bad. While it won't garner celebrity as an investor it will probably keep us solvent. Similarly, while it won't produce that Incandescent-Moment-of-Being-Completely-Right on an investment bet, it also won't produce the dark moment of realizing that you've been disastrously wrong.

So what DO we do if we fear a significant market correction or a major bear market? Here are some guides to action:

•           We don't go to extremes or become slaves to an idea. Just as it was                once said of Jane Austen that she had "a mind so fine that no idea                could violate it," pragmatism and diversification should run                portfolios, not concepts. Gold bugs, slaves to a monetary idea, have                awaited a financial apocalypse for decades, missing the greatest                bull market in history.

•           We accept the idea that we'll always be somewhat wrong because we'll                also be somewhat right. If you own more stocks than ever, this means                you'll sell down to a lower level. It does not mean that you will                sell all stocks. It means that if you were at 75 percent stocks, you                might sell down to 50 percent. Calibration is the watchword, not sea                change.

•           Cash, mere cash, can multiply your opportunity. An established 401k                investor can reduce risk by holding money market funds equal to one                or two years of future contributions. This would reduce risk of loss                before a decline while multiplying gain as you feed that same cash                back to equities over a period of one or two years.

•           Reduce risk--- but remain in equities. This is no guarantee that we                will avoid losing money, but it can help to avoid highly speculative                stocks--- the ones that can collapse nearly overnight.

Let me give you a personal example of risk reducing. Late in 1997 I started getting interested in fiber-optics equipment stocks and began to follow Ciena, a prime mover in the splitting of a light waves into sections of spectrum that multiply the ability to carry digitized information, Ciena was a poster child for the Internet Future.

In the fall of 1998, after the companies' merger with Tellabs had fallen apart and it had lost a major sale to a competitor, the share price fell from a high of $85 to $13. I bought some shares.

Early this March the shares peaked at $177. I'd love to tell you that I sold at $177 but I didn't. I sold a few weeks ago at $90 and immediately suffered deep remorse as they bounced back to $125.

Why not just hold on?

Relative risk. According to the earnings forecast data on the Microsoft Investor website, Ciena is selling at nearly 240 times estimated earnings for this year and is expected to grow at 30 percent a year over the next 5 years. MCIWorldcom, a larger company that will also participate in the Internet Future (albeit less dramatically), is selling at 23 times estimated earnings and is expected to grow at nearly 28 percent a year over the next 5 years. MCIWorldcom is selling for one-tenth the earnings multiple of Ciena even though its future growth could be the same.

So I'm now a shareholder in MCIWorldcom. My hope is that I've reduced risk a lot more than I've reduced opportunity.

Bottom line: there are lots of ways to reduce risk. The important thing is to pick one and do it.