The S&P 500 (NYSEMKT:SPY) suffered two one-day drops of 3% or more in October, and returns were even worse on each of those days for growth investors. Although single-day slides of 3% or more are scary, savvy investors who prepare for them can turn them into an opportunity.

In this clip from Industry Focus: Healthcare, host Shannon Jones and Motley Fool contributor Todd Campbell remind investors how common these single-day drops are, and they share tips on how to not only survive them, but to make money from them.

A full transcript follows the video.

This video was recorded on Oct. 31, 2018.

Shannon Jones: In terms of the average everyday investor, when it comes to protecting yourself, preparing for not only bad news, but also corrections within the market, what are some general words of wisdom when it comes to portfolios?

Todd Campbell: Ignore a lot of what you hear. [laughs] I have to say it. Just back up a little bit. We saw this nearly 10% decline in the market this month. Over the course of a month, OK, if I lose a percent here or there, that's not such a horrible feeling. But we had two separate days this past month where the S&P 500 fell more than 3% in the trading session. I guarantee you that we have listeners out there who saw their accounts fall by multiples of that, because some of these stocks were falling 5-10% on those days. That's hard. It's hard, as an investor, to watch and see that, and not want to do something. Right, Shannon? We are hard-wired to avoid danger. It doesn't matter if that danger is a ghoul coming up behind us that we can't see, the creepy music sounding, or if it's coming in a falling account balance. We need to fight back, and a way we can fight back against those emotions and those reactions is to be very proactive. Recognize that 3% declines, yeah, it's bad, but they're not uncommon. They happen. Most of the time, the stock market is actually trading higher. If you had gone out and bought the 3% dip, you would oftentimes come out ahead within 30 days. If you look just since 2000, you've seen the S&P 500 drop at least 3% 66 times. 66 single-day drops of 3% or more. Undeniably, each one of those felt absolutely horrible. Right, Shannon?

Jones: It was painful, to say the least. And one thing I want to bring out is, especially if you're a healthcare investor, it's important to diversify. That helps at least lessen the pain and the blow long-term. I will say, though, that even if the market were to go into true correction territory -- maybe a recession, even -- the healthcare industry is one of those sectors that, generally, I don't like the term "recession-proof." I don't really think anything is. But, in terms of performance, if you think about it, when it comes to medications, when it comes to surgeries, even, this is one of the sectors where people will tend to continue to spend money. You need your medications. If you're sick, you need to go to the doctor. If you're really sick, you may need to have surgery. There are definitely some defensive plays that you can go after. There are stocks like Johnson & Johnson, a huge dividend aristocrat stock that's got a very diversified revenue base. It has the consumer goods, it has a quite impressive immune oncology branch to it, as well. Another one is Intuitive Surgical. That's probably one of The Fool's top stocks. Intuitive Surgical is focused on robotic surgery, and really led the way with robotic surgery. There are a number of different ways that you can start to diversify the risk across the healthcare space. And really, even more so, your portfolio shouldn't just be made of all healthcare stocks, either.

Campbell: Right. Diversify, diversify, diversify. See? I said it. I'm going to try to do an episode where I don't. I said it again. I would also add to that list, Shannon, don't use margin. Margin cuts both ways. We saw plenty of people, I'm sure, last month who ended up getting forced out of stocks because of margin calls, and forced selling by their brokers. Just don't do margin. Diversify. Don't use margin. Keep a little bit of dry powder, a little bit of cash on the sidelines. It doesn't have to be a lot. Even if it's only 5% of the portfolio, that will allow you to take advantage of these drops. When a name like Intuitive Surgical goes on sale, or Illumina, or some of these other great companies that we talk about on the show, when those go on sale, you're able to step in and at least deploy some of that money on those 3% down days.

To go back to that one more time, to hammer this point home, there have been 18 one-day drops of at least 3% just since 2010. And 12 of the 16 leading up to the two that happened this month, the market was higher 30 days later. So, don't react in the moment to those down 3% days. Have a watchlist. Have some top stocks ready, a little cash on the side to be able to buy and take advantage of it. It's an opportunity.

Shannon Jones has no position in any of the stocks mentioned. Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends ILMN and ISRG. The Motley Fool owns shares of JNJ and has the following options: short January 2019 $140 calls on JNJ, long December 2018 $271 puts on SPY, and short January 2019 $285 calls on SPY. The Motley Fool has a disclosure policy.