Welcome to the end of another week. I for one am really happy Friday's finally here.

That was some nice drop in the market yesterday, wasn't it? Are you doing anything about it? I hope not. My hope is, you have your portfolio allocated according to your current station in life and that days like yesterday are not too different from any other day.

The market will go up and the market will go down. If you've spread your risk out over various security types then you should sit tight and not worry about down days like yesterday any more than you should worry about up days where you could have made more money but didn't.

Think about that for a minute. If you're well diversified, you're not only not exposed 100% to downturns like yesterday's sell off, you're also not able to take 100% advantage of the days when the bull rages. Whenever I talk to people, young people in particular, their biggest objection to asset allocation strategies is they feel like diversifying their portfolio is akin to watering it down.

I got an email from a reader a few days ago. The message was in response to my article, What to Invest in Now. It had to do with asset allocation and risk management, which my article touched on briefly. The reader pointed out that his company had helped him solve the allocation vs. risk problem in the most optimal way possible. His company had just contracted with a major mutual fund company to provide access to a family of professionally managed retirement date targeted mutual funds.

Did you get that? It's a mouthful. Here's what it means. He can now put some or all of his 401-k savings into a certain type of managed account structure within his 401-k. He then tells the manager what he wants his expected retirement date to be. Within the managed account structure, his funds are then apportioned among a number of mutual funds according to some optimal asset allocation formula known only to his 401-k management company.