So here we are, coasting along quite nicely with the S&P 500 up more than 11% for 2006. For equity investors, these have been fat and happy times indeed.

But times weren't always good. Remember last summer, when the market pulled back more than 6%? Ugh, I hear some of you saying -- don't remind me. Thing is, downturns provide important opportunities for savvy investors, and that's true on at least a couple of fronts.

For starters, when the market takes a tumble, you can snap up shares of high-quality companies at a discount. Dell (NASDAQ:DELL) and Microsoft (NASDAQ:MSFT), for example, were already trading with attractive multiples before May's, um, mayhem; they looked even better in the summer, and have since recovered from their lows.

And another thing
Downturns also give you a chance to stress-test your portfolio.

If you plan to be in the market for the long haul (and you know you do, Fool), you'll need to get comfortable with the market's inevitable ebbing and flowing. One way to do that is to use a market slump to get a bead on whether the allocation mix you may have haphazardly backed into is built for speed -- or to go the distance.

For example, if your holdings cluster around big-cap growth stocks like those I mentioned above, you may want to consider balancing them out with more value-oriented fare like Citigroup (NYSE:C) or Duke Energy (NYSE:DUK), each of which trades with a price-to-earnings ratio well below that of the broader market. After all, adding value plays to your growth mix can provide a smoother ride on the way to retirement bliss. Then again, you might consider stepping down the market's cap range and reeling in smaller fish, too, a move that can help fortify your portfolio when the big boys lag the pack.

Beyond that -- and as the guy who runs point on the Fool's Champion Funds newsletter service -- I firmly believe that the best and most convenient way to construct a smartly allocated portfolio is with funds. Trouble is, the vast majority of 'em are overpriced laggards.

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This article was originally published on May 23, 2006. Shannon Zimmerman doesn't own any of the securities mentioned above. Microsoft and Dell are Inside Value picks. Dell is also a Stock Advisor selection. Duke Energy is an Income Investor pick. You can check out the Fool's strict disclosure policy by clicking right here.