During the period of volatile stock markets and depending on what one's investment portfolio strategy is, one may be tempted to either sell their stocks or buy more stocks for their investment portfolio. When the global markets succumbed to panic selling and is crushing down, the severity and nerveousess are enough to cause even good investors, let alone amateurs to make panic decisions on what to do with their investment portfolio whether to sell now and stem further losses or to buy more stocks at currently low prices to add on to their investment portfolio.

For most amateurs, they would most probably be joining the panic selling group of people to cut their losses while in the mean time professional investors would be buying taking advantages of these low prices to buy even more. As such, if you have a pile of cash sitting somewhere or if you have some cash to spare, it would be generally a good move to keep buying at these times. Buying at these lower prices would not only average down the price of your existing share holdings but also reduces the price volatility of your portfolio as well. The same applies if you are holding mutual funds in your portfolio. The practice, known as dollar-cost averaging is an investment portfolio strategy used by many investors out there and is particularly effective in countering the price volatility of your holdings. In addition, dollar-cross average also eliminates the timing issue of buying at the wrong time or buying at the peak.

This practice is possible provided you have the cash necessary to buy more. It is at these times of volatility that investors should remain focused on their investment goals and keep their emotions at bay. Many times, emotions are driving the markets and decisions-making process instead of a disciplined and methodical approach and these have in many ways ruined one's investment portfolio significantly. One should have a clear view and focus of their investment portfolio strategy and stick to it and adjust accordingly in a planned manner no matter what market conditions one is running through. 

Separately, there are also some investors who try to time the market by the buying and selling of stocks or even equity mutual funds to reap a profit from the stock market's short-term movements. These investors are usually tempted to timing the market particularly during wild swings of the volatile markets. As they are trying hard to make a gain in the stock market by switching from one stock to another, they will often end up in dissapointments. Although market timing strategies are often recommended by the so called 'professional investors', they usually show little success. This is because stock markets are always known to be volatile and it is almost impossible to predict the stock market movements as they are affected by countless factors, both domestic and foreign, affecting their daily and weekly stock price fluctuations.

In fact, there are even more risks associated with trying to time the market. What these investors do is to try and correctly predict the market's trend and its turning points. Without adequate skills to judge signals and timing the entry and exit points, one would be exposed to risks such as missed opportunities as well as suffering huge blows of losses. Also, with higher stock switching frequency one would be susceptical to having higher transaction fees and costs involved. 

As such, as has been observed in the practice of using dollar-cost averaging investment portfolio strategy, the risks highlighted above are no longer a concern. Dollar cost averaging is simply a process that involves buying more stocks everytime the market takes a dip and by practicing dollar-cost averaging strategy, one would be buying more stocks or mutual funds everytime the market drifts lower. As a result, dollar-cost averaging will produce a lower average cost of a particular stock in return.

However, this investment portfolio strategy is typically more suitable for long term investment approach. It does not work as well for stocks flipping over the short term. Besides that, one should also not blindly dollar cost average stocks in difficult market condition when the stock markets are taking a hammer without doing proper research first hand. One should properly evaluate and fully understand the financial status of the companies before investing in them. Without proper fundamental analysis and research, one could end up investing in companies that are not financially sound and run the risks of bankruptcies. As such, it is advicable to dollar-cost average only if you think the companies and their businesses would survive the downturn.

Apart from that, it is also advicable that investors revise and rebalance their portfolios regularly at least yearly to ensure that their stock and mutual fund allocations in their portfolio are in line with their investment goals, investment strategies and risk profiles. For instance if say the stock market has soared and one's equity exposure has now exceeded the level of comfort or risk tolerance, one can cut down on that exposure and switch into other investment classes such as bond or money market funds when rebalancing one's asset allocation.

It is a generally a bad idea to hold on to purely a large single asset class as one's investment portfolio will become too concentrated in that particular single asset class. It is always better and it makes great sense to diversify one's portfolio across multiple asset classes as if one asset class performed poorly, one's investment portfolio would not be affected severely.

All in all, it is best that investors always focus on achieving their medium to long-term investment objectives and practice the investment portfolio strategy of dollar-cost averaging and evaluating the need for portfolio rebalancing regularly. These are the most effective ways for investors to stay focused on their long term goal and to counter them from over-reacting to market turbulance as well as short-term fluctuations of the stock market.