It seems you cannot read the news without hearing more bad news about the stock market and US economy. The dollar is reaching all time lows daily, the real estate market has no signs of near-term hope, oil is nearing $100 a barrel, the stock market is questionable, financial institutions are hitting 52-week lows, and health care costs are rising. What’s not to fear?

The stock market has been on a tear since 2002, and experts believe we may be due for a market correction. Statistics tell us that the market rises and falls, and corrections are to be expected. And, if we happen to be entering a recession, your portfolio can experience major losses. Luckily, you can protect your downside risk from the market selling-off stocks and experiencing a correction.

Here’s what money managers recommend:

Use volatility to your advantage: One day the market advances, the next day it sells-off to drive stock prices down. That means there are opportunities to sell stocks in strength (or during advances) and purchase them during weakness. Fear in the market creates buying opportunities.

Buy on the Way Down: By continuing to regularly purchase shares of stock you purchased at a higher price, dollar-cost-averaging will minimize your losses, as you purchase more quantities of shares at a discount when they hit bottom. For example, you purchase $300 of MSFT at $35 a share, and later your $300 is able to buy 14 shares as it falls to $25. This protects your downside and increases your ability to profit when the stock rebounds.

Ignore the Day-to-Day: If you are a long term investor, keep a pulse on the trends on a weekly basis, but resist letting the day-to-day news and activity create panic.

Keep Cash on the Sidelines: Keep some cash on hand in fixed income holdings and watch for 3-5 days of 2% decreases, at which point you can consider injecting your cash into the market.

Double Check Your Portfolio: Asset allocation is most important during sell-offs. Now is a good time to double check that you are well diversified in different industries and groups. Own the big, blue-chip, no-debt, cash-cow companies that pay dividends, which will have the most resistance to a market decline.

Check the P/E Ratios: Stocks with high price-to-earning ratios, relative to their peers or similar companies, will experience the greatest declines. Invest in stocks with reasonable or low P/E rations compared to other stocks in the same category.

Cushion Your Downside with Bonds: Keep some of your money in government bonds and bond mutual funds to limit your downside risk.

Take a Look in the Mirror: Remind yourself what your goals are (growth or income), your time frame (6 months or 10 years), and your risk tolerance.

When investor confidence is high from bull runs, protecting yourself from losses can easily be forgotten. The future is uncertain, and wise investors remember when considering their earning potential to always keep in mind their downside risk. Luckily, even during times of turmoil being smart with your asset allocations and market timing can help you avoid the brunt of market declines.