In order to stay in the market through both good times and tough times � so you can reap the benefits of long-term market investment � you need to choose your holdings to reflect the amount of fluctuation you can tolerate and still sleep at night. Overstepping those limits (regardless of how well diversified your portfolio is) may result in panic when the market plunges, and cashing in your holdings out of fear. As you can well imagine, this usually results in taking a loss.

In other words, it�s more important to find a comfort level that will allow you to sleep at night than to improve your return rate by a few percentage points and risk scaring yourself out of the market if times get tough. (I�ve found it also helps your comfort level if you ignore market forecasters!)