You can hurt yourself more by acting rashly than holding steady.
Diversification means two things.
Many investors have learned the hard way over the last year that owning shares of companies in different technology and telecom industries doesn't constitute diversification. Meanwhile, though virtually all tech stock sectors have plummeted, stocks in sectors such as insurance, energy, utilities and retail have rallied over the last year. So investors who have owned shares in those sectors have at least offset some of their losses in technology. If your portfolio clearly needs better diversification, now is the time to decide what changes you should make and how to make them. Some people assume they're diversified because they own a number of mutual funds, which in turn own a lot of stocks.