Rebalancing Portfolio May Cushion Market Downturn.

So you thought stocks were safe?

So did everyone who studied the long-term history of Standard & Poor's 500 stock index. That's the basis of most stock-market price studies and most investor myths.

True, over five-year periods, S&P stocks lose value just 10 percent of the time. Over 10-year periods, it's more like 3 percent.

But that's not zero percent, so stocks aren't safe. Just because something is unlikely doesn't mean it's not going to happen. Our generation could be among the unlucky 10 percent.

Besides, today's unhappiest investors aren't in the S&P stocks. They're in dot-coms, tech stocks or growth mutual funds that concentrated in tech, and are currently down 40 percent or more.

You cannot study the price history of the companies in the S&P and imagine that it applies to speculative investments or stocks with super-high price/earnings ratios.

Such investments sometimes produce terrific returns (as in recent years) and sometimes poop out.

What's more, you can't take the price history of the market in general and apply it to individual stocks. The market usually rises over the long run. But individual companies can fail or lag the market for 30 years.

Zenith, a shining tech stock in its day, wound up in bankruptcy. So did Wang Labs. RCA, the most exciting wireless-communications company of the 1920s, never recovered from the crash of 1929.