A Correction might be a time to diversify your Stocks

The reason for this is in March of 2009 when it dipped it's lowest in quite a while:

1. CNNMoney.com Market Report - Mar. 9, 2009

   money.cnn.com/2009/03/09/markets/markets_newyorkCached

   Mar 08, 2009 · ... another 12-year low ... March 9, 2009: 11:14 AM ET. ... Most stock quote data provided by BATS. Market indices are shown in real time, ... 

   
   

   Our stockbroker advised us to diversify our stocks by selling all or most of them and going from a half dozen stocks to about 30 and also beginning to buy Muni bonds because they are usually tax free. So, when you calculate their advantage the average way to calculate them is much higher than the way you calculate stocks because dividends are taxable. Most stockbrokers recommend about a 40% muni bond to 60% blue chip dividend bearing stocks for unstable times like we have seen since about 2007 or so. 

   
   

   By the way, the best performers during the Great depression were Muni Bonds where the least amount of people lost money during that time.

   
   

   Now however, the problem is cities going bankrupt by losing their property tax bases by property losing so much value since 2006 now. So, because of all the unrealistic benefits promised to City unions it is driving slowly more and more cities into bankruptcy. So, be sure to check if the city or county you want to invest in through Munis is on the way to bankruptcy before you invest.

   
   

   Also,you need to make sure that Treasuries or some other form of insurance is provided by that city or county to cover your principal so you always hang onto that no matter what. So, investing in Munis is much more tricky than before in this way. Look at Stockton and Detroit and what happened to Muni bond holders in each place for example.

   
   

   However, downturns in the market are often good times to diversify your stocks if you are close to a bottom in the market and have some faith that the market over time will recover. So, you sell low and buy low which greatly reduces your capital gains taxes in the process and by diversifying (spreading your money invested over more stocks and interest bearing vehicles like Dividends etc.) you hedge your long term bets in the markets. So, you might move from just a few good blue chip stocks to many blue chip stocks that are still trending upward in the long haul throughout your life and your children's lives. 

   
   

   However, check with your broker and do the math regarding capital gains taxes for selling stocks and other instruments before you do this to see if it is to your advantage or not long term.

   
   

   But, it is quite possible that by selling stocks low and by buying low because the market is down you can greatly enhance your long term investments throughout many instruments thereby lessening your exposure long term.