Many people are already doing this, either directly or indirectly. Maybe they're doing it but they don't know they're doing it. The secret of how to take the nervousness out of investing is to make the conscious decision to allocate your investments in a strategic fashion.
For example, I'm a Balanced investor. What does that mean, for me? That means that my asset allocation is 60% equities (or stocks) and 40% fixed income (or investments with a stated rate of return). I stick to this asset allocation through good markets and through bad markets. If my equities become 65% of my portfolio then I take 5% out and allocate it to the fixed income component, and vis versa. This keeps me disciplined in my approach with my investment portfolio. It also does something else ~ it keeps me disciplined in the 'sell high' and 'buy low' strategy that tends to bring about successful investing.
Currently earning an income, I may not be so worried about the fluctuations of the market as I will be when I am retired. Without income replacement it is challenging to watch those dips in the market but my strategy of keeping 40% in fixed income will help me. While equities are out of favour the less volatile fixed income component of my portfolio can become my major source of cash flow. This way I can wait for the equity markets to return and I will not be forced to sell them while they are at their all time bottom price levels.
Having my portfolio balanced, from an asset allocation perspective, is the first step in negotiating the waves of the stock market.
