It may be tough to remember amid the market's ongoing upheaval, but not too long ago, everyone was gaga over Dow 13,000 -- even me. Sure, it was just an arbitrary milestone, like observing your odometer as it rolls over to a fresh set of zeroes, but it was fun to watch anyway. And to the extent that the market's rise reflected investor optimism about corporate fundamentals and earnings, that 13,000 figure even had at least a bit of investing substance behind it.

Call it the best of both worlds.

Alas, what goes up ...
... usually comes down. Consider the meltdown that began in early 2000.

As you may painfully recall, the market tumbled hard then, and kept tumbling for quite a long time. Between March of that year and the close of 2002, the S&P-tracking SPDRs (SPY), whose top 25 holdings currently include Coca-Cola (NYSE:KO) and Chevron (NYSE:CVX), declined by 34%. Meanwhile, the Cubes ETF (QQQQ) -- which tracks the Nasdaq 100 and counts Starbucks (NASDAQ:SBUX), Apollo Group (NASDAQ:APOL), and Activision Blizzard (NASDAQ:ATVI) among its top components -- shed some 77% of its value.

With those cautionary tales in mind, savvy investors should strive to ensure that their investments are spread intelligently across the market's valuation spectrum. Buttoned-down "value" stocks, for example, tend to hold up better than growth-oriented fare during downturns. During the period cited above, the Russell 1000 Value bogey, which specializes in the lower price-to-earnings likes of Bank of America (NYSE:BAC) and ConocoPhillips (NYSE:COP), declined by "just" 14%.

Things are looking up
Meanwhile, some investors 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. In other words, this fund played a mean defense, reaping plentiful rewards for that savvy strategy over time.

The Foolish bottom line
Contrarian that I am, I think a long, hard look at your own portfolio is a great way to celebrate any market milestone, or invest during pullbacks. Ensure that you have a well-diversified, comprehensive group of both funds and stocks to see you through bull and bear markets alike.

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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. Activision and Starbucks are Motley Fool Stock Advisor recommendations. Coca-Cola and Starbucks are Inside Value choices. Bank of America is an Income Investor pick. The Motley Fool owns shares of Starbucks. You can check out the Fool's strict disclosure policy by clicking right here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.