It may be tough to remember amid the market's massive sell-off, but it wasn't too long ago that everyone was gaga over Dow 13,000 -- even me. Sure, it was just an arbitrary milestone -- but still, like observing your odometer as it rolls over to a fresh set of zeroes, it was fun to watch anyway.

Besides, to the extent that the market's rise reflects investor optimism about corporate fundamentals and earnings -- as opposed to a top-down assessment of economic trends -- 13,000 is an arbitrary marker with investing substance behind it.

Call it the best of both worlds.

Alas, what goes up ...
... usually comes down. Consider, by way of dramatic (and protracted) example, the meltdown that began in early 2000.

As you may painfully recall, the market tumbled hard then -- and for quite a long time. Indeed, between March of that year and the close of 2002, the S&P-tracking SPDRs (AMEX:SPY) declined by 34%. Meanwhile, the Cubes ETF (QQQQ) -- which tracks the Nasdaq 100 and counts Research In Motion (NASDAQ:RIMM), eBay (NASDAQ:EBAY), and Amgen (NASDAQ:AMGN) among its top holdings -- shed some 77% of its value.

With those cautionary tales in mind, savvy investors should strive to ensure that their basket of investments is spread intelligently across the market's valuation spectrum. Buttoned-down "value" stocks, for example, tend to hold up better than growth-oriented fare does during downturns.

Case in point: During the period cited above, the Russell 1000 Value bogey -- which specializes in the lower price-to-earnings likes of ExxonMobil (NYSE:XOM), Devon Energy (NYSE:DVN), and Bank of America (NYSE:BAC) -- declined by "just" 14%, while the S&P and Nasdaq 100 shed between a third and three-quarters of their value.

Things are looking up
Some investors, meanwhile, actually made money over that stretch. While I headed up Champion Funds, I recommended a fund that posted a gain of more than 28% while the aforementioned indexes were headed south. This fund, in other words, played a mean defense, and over time, its rewards have been plentiful.

The Foolish bottom line
Contrarian that I am, I think a great way to celebrate any market milestone or to invest during pullbacks is by reviewing your portfolio to ensure that you have a well-diversified, comprehensive group of both funds and stocks that are sure to see you through bull markets and bears.

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This is an updated version of an article first published April 24, 2007.

Shannon Zimmerman doesn't own any of the securities mentioned above. Bank of America is a Motley Fool Income Investor recommendation. eBay is a Stock Advisor choice. You can check out the Fool's strict disclosure policy by clicking right here.