By the editors of Wealth Management Exchange

The stock market seems to have fallen off a cliff once again. After another week of market turmoil, some have panicked while others have sought safer investment options.

But those with cooler heads say that despite multi-hundred drops in the market and increased bearishness, it is time to "catch your breath and look at the big picture."

The market hates uncertainly and that is what it is experiencing as the endless streams of banks declare more sub-prime credit hits and write-offs. The pundits are no longer being shy about uttering the "R" word after the market recently dropped another 235 points. The Dow is now down nearly 8 percent since it set a record high only one month ago. The Nasdaq composite index recently suffered its worst five-day performance since the end of the tech bubble in 2002.

And what makes this showing all the more depressing is that many sectors seem to be hurting—financial services, retail and now technology as well. Which are the sectors to jump into? No one seems to have a clue as they fear a ripple effect taking hold.

"Some are sure the sky is falling, whereas others believe the environment for U.S. stocks remains positive after more than five years of a bull market," said Al Goldman, A.G. Edwards Chief Market Strategist. He added, "even if the economy is headed into a recession, which we doubt, everyone except the forever chicken littles knows that sooner or later the economy will recover. If the action of the market says most are willing to look beyond a possible valley of recession to peaks ahead, so are we."

In fact, many in the CNBC crowd use terms like "expected correction" "pause" or "catching its breath" to describe recent market volatility. But the fact of the matter is that the meltdown in sub-prime mortgages, the credit crunch, residential real estate doldrums, high oil prices, and the slowdown of private equity and merger deals are all spooking the market.

If credit conditions tighten more sharply and more broadly throughout the financial sector, oil prices continue to climb and corporate earnings dip, the economy could he headed for some sort of slow down.

Still, the fundamentals do look good. Inflation is under control and the economy is growing. The government's report on third quarter gross domestic product showed the U.S. economy grew at a nice 3.9% clip. That represented a large increase from the very small 0.6% rate in the first quarter. And, recent unemployment numbers showed no hint that employers are cutting back.

Whereas the early October surge in the markets brought the Dow back into record territory, it dropped off sharply by mid-November. Hold onto your hats. We, as others, expect the volatility to continue.

Sticking with the long-term plan seems the best strategy.

Robert Dye, senior economist at PNC Financial, was quoted as saying, "In the long run this is a healthy process. In the short run this is very painful." Some investors are taking profits and unloading stock they really don't want anyway. Others say this is a great time to buy; there are bargains out there.

"The best course of action is the least impulsive one," said Ranji Nagaswani, Chief Investment Officer, Alliance Bernstein. Strategically tread carefully. Sure there is continued support for public equity markets. But it would prudent for investors not to boost their stock exposure in hopes of capitalizing on a market rally. They shouldn't cut their stock exposure to avoid a market correction, either, added Nagaswani.

The volatility in the markets is not abating. If anything, it is intensifying. The index of volatility in the stock market known as the VIX has gone from record low levels of about 10 at the start of '07 to the mid-20s.

"In these times, the right strategy is always to stand pat.," says Jeremy Siegel, noted market expert, professor and author of "Stocks for the Long Run." "For everyone who has resisted the temptation to sell, and certainly for those who follow the market closely, I understand there's a sinking feeling in the pit of your stomach when you see 300, 400, 500 point declines. But everyone who has sat tight during those times has been rewarded in the future."

Investors may work to rebalance their portfolios slightly during this period. This is the strategy that some of the most savvy educational endowments use often.

"When marketable securities asset classes (domestic equity, foreign developed equity, emerging market equity, and fixed income) deviate from target allocation levels, the university's investment office takes steps to restore the allocation to target levels," said David Swensen, head of Yale University's Endowment, in his book, "Unconventional Success: A Fundamental Approach to Personal Investment."

Even though rebalancing can represent a nice bonus for investors, the fundamental motivation for rebalancing concerns adherence to long-term policy targets, said Swensen.

Stocks will continue to trade in a "choppy fashion."

That's the terminology used by Bob Dole, Vice Chairman and Chief Investment Officer, at Black Rock.

Still investors need to work with their financial advisors and keep a sharp eye on the indicators. For example, corporate earnings, which cushioned the market after its setback last February, have been somewhat disappointing.

"An accommodative Federal Reserve, combined with the benefits of the weaker dollar, should help markets overcome the headwinds of declining corporate earnings," said Dole.

What about investor behavior? Regarding the equity markets, the uncertainty in investors' minds will not be erased anytime soon. Thus there could be periodic corrective action over the next few months.

"Well, predicting any market over the next few days is always very, very difficult," commented Jeremy Siegel. "What we do know are two things. First of all, markets are connected around the world more than ever before. So, we're going to see very strong correlations: We saw that what happens in New York goes to Europe and Japan and everywhere else. You're not going to get independent movements from these markets.

"The second thing we know is that volatility breeds more volatility in the short run. So, we're going to see a lot of sharp movement - probably both up and down - in the markets. But I think that they're going to sort themselves out in the sense that there are a lot of positives now for stocks."

In the months ahead, bigger is usually better.

On the whole, large multinationals are a safer investment bet than small cap firms. That's because there is a clear cut trend of larger firms gaining a greater share of their profits overseas where growth is stronger than in domestic markets, In the 1960s the share of international profits at U.S. firms was about 5%; it is now closer to 25%. International earnings of U.S. firms grew 16.4 % in the first quarter compared to a year ago. Domestic earnings grew a slim 2.7%.

"As we have been saying for some time, in the current environment we believe those areas of the market that can benefit from the weaker dollar and stronger overseas growth are likely to outperform," noted Dole of Black Rock.

While some smaller internationally minded U.S. firms also profit from overseas growth, the large multinationals have the marketing and financial muscle to take greater advantage of the opportunities abroad. In addition, smaller firms are more likely to be hurt by the credit crunch because of the difficulties of getting financing.