Don't do it. Please.

Money manager Stephen Leuthold recently reviewed his 40 years of experience and said, "I think [the 50% decline in the S&P 500 peak to trough has] wiped out the public as a serious investor for maybe 10 years."

After three years of a bear market, many individual investors have deserted stocks. Participation in employer-sponsored retirement plans is down, most recently to 73% of those eligible. Stock investors are flocking to bonds, precisely when they probably represent more risk than stocks.

Refuse and resist. Don't look backward or indulge in backward thinking -- if it's thinking at all. Investors, encouraged in part by declining portfolio values and more by the media, have a disturbing habit of reacting to the past and ignoring the future. Notice I didn't say learn from the past. Learning means education; reacting means fear.

Going the wrong way
As long as I can remember -- which goes back to junior high and my father's first efforts to educate me about the stock market -- the rule has been: When the individual investor is most enthusiastic, look out. And when the individual investor is most pessimistic (as perhaps today), buy.

You knew individual investor mood by following trends in odd-lot sales. Remember those? Before discount brokers and the ability to buy any number of shares cheaply online, you paid lower commissions for round lots -- multiples of 100 -- and paid dearly to buy or sell odd lots, such as 37 shares. The higher the relative volume of odd lots, the greater the contrarian market indicator.

Media mood indicators
Without odd-lot statistics, there is no surer indicator of sentiment than the efforts of media outlets to pander to your sentiment. Right now. Today.

Go to your favorite quick-moving online business site, and note the tenor of the headlines. They play to the market averages' current direction and your momentary emotions.

Averages up? "Markets fly on [anything]." Averages down? "Markets tank on [whatever] fears." The media makes money by selling you proprietary products and grabbing and holding your attention for advertisers. Right now, we are likely afraid that we won't have enough to retire, let alone meet our expenses along the way. We are easy marks for fear.

A depression?
Experienced investors may fear that we face a Japanese-style deflationary spiral, perhaps influenced not only by worldwide economic malaise, but downward pressure on prices from a growing China.

I've been reading more and more of this from money managers whose clients are very high net worth individuals -- heck, let's call 'em rich people. I respect the thinking of some, such as John Mauldin and Michael O'Higgins, but they are marketing themselves to those more concerned with keeping what they have than making more. Mauldin thinks we'll muddle through, O'Higgins that a depression is coming.

Most of us don't have that choice. We must accept some risk in order to increase returns -- not throwing-away-our-money risk, but carefully-considered-public-company-stock risk.

More eggs, more baskets
Of course you and I don't want not to lose money, but at the time of maximum pessimism, we will lose more by failing to invest. We should not put all of our eggs in one basket -- the house, stocks in one industry, or gold. Some diversification is essential. A rainy day fund is required.

The farther you are from retirement, the more you should consider investing in low-expense, broad-market index funds. If you feel better, allocate most to stocks, but some to bond funds -- realizing that a bond fund (I'm speaking generally here because there are all sorts of bond funds) will likely move inversely to interest rates, and interest rates are at historic lows. Mathew Emmert explains the risks clearly.

If you have the time and interest to research individual stocks carefully -- to follow their businesses well enough to understand them and recognize sell signs, slowly acquire up to a dozen in different industries. If you are concerned about price, invest regularly to smooth out your purchase prices. Consider Drip investing.

Time is your friend
Don't sell in a panic. Don't move everything to bonds. Don't react. Think carefully and think ahead.

Sure, we could have a fourth or fifth or sixth year of a bear market; interest rates could decline; and bonds could do well a bit longer. We could even have a lengthy deflationary period -- like the Great Depression. But even then, if you had regularly invested in the broad stock market throughout the time it took the major market averages to return to 1929 highs, you would have profited nicely, as I explained in Party Like It's 1929.

If you are concerned that your retirement is now more distant, the worst thing to do is sell and sit on the sidelines. And it's a terrible idea to panic sell if and when we go to war. By looking backward and living in fear, you risk losing out on market returns that will help your future.

Stay strong; keep your nerve. And if you need to do something while you stay invested, be Foolish: Share your concerns on our Economy & Markets discussion board, where the company is welcoming, smart, and cautious.

Tom Jacobs' (TMF Tom9) parents lived through the Great Depression and tried to teach him its lessons. You can read find columns in his archive and his stocks on his profile . Motley Fool writers are investors writing for investors .