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Here’s how to manage your portfolio in a falling market

It’s getting ugly out there folks. Over the past month the share prices of some of the country’s biggest and brightest companies have been pummelled as post earnings season volatility jumps.

Shares in blue-chip superstars Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW) are down over 5% in the last month, while BHP Billiton Limited (ASX: BHP) is down over 6%.

It’s one of the biggest bouts of volatility seen by the S&P/ASX 200 (INDEXASX: XJO) all year. But it’s not the first, and certainly won’t be the last.

So here’s how to survive the falls and make sure you come out on top:

1. Take a few deep breaths

It always stings when we feel like we’re losing money. Even seasoned investors can’t help but feel a little glum at a portfolio lit up in red. Taking a few deep breaths is a simple way to slow the heart rate and clear your head to examine the situation logically.

2. Remind yourself why you bought the company

Despite the wide-spread falls there is a good chance that there has been absolutely no change to the operations of the company you own.

Though some companies, like iron ore monster Fortescue Metals Group Limited (ASX: FMG), may have seen a shift in business conditions, on days of widespread volatility many other companies will not have changed.

It helps to remind yourself what attracted you to the company to start with. That unbeatable competitive advantage? The top management team? That exclusive healthcare patent? Chances are they are the main factors that will remain the same.

Regardless of the share price fall, Telstra customers will still be watching YouTube and Woolworths’ customers are still going to stop in and pick up ingredients for dinner tonight.

3. Put it in perspective

Volatility is a natural part of investing in shares. The last 12 months has been exceptional for many ASX-listed companies with strong results and rising earnings. Expecting long-term volatility will help you come out on top while others are fearful.

4. Take the next step

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Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned in this article.

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