Watching money recede probably isn't your favorite spectator sport and there may be an overwhelming urge to jump in the game to change the momentum your way. But, before taking the field, you'd be smart to review the tapes of previous games.

Let's keep this simple. A recession is defined as at least two consecutive quarters of negative GDP growth. GDP measures the size of an economy by the total market value of all final goods and services produced during a given calendar year. Recession gives way to a falling stock market as businesses cease expanding, unemployment rises, housing prices fall, cost of foreign goods increase as the dollar weakens, and all sorts of other monsters crawl out of the closet or from under the bed.

Since the beginning of the 20th century, there have been ten official US recessions. Remember, these do not include simple economic slowdowns that don't meet the official criteria. Add these to the list and we can easily double the number.

Except for the Great Depression that lasted ten years from 1929-1939, recessions have historically had a lifespan between 1-2 years. With all these downturns, it might seem that the market would struggle to overcome all these headwinds, but a look at the growth of the Dow Jones Industrial Average tells a different story. On December 31, 1928, the eve of the Great Depression, the Dow closed at 300. Today in the first quarter of 2008, we're at about 12,000. This of course is only the "priced based" gain. If we were to include dividends reinvested in the market, our gain would increase dramatically.

Thus, we have lesson number one. Historically, recessions have not predicted the end of civilization as we know it. The cost of the Vietnam war, skyhigh prices of oil in the 1970's, the collapse of the dot com bubble or the 9/11/01 attacks were all eventually overcome by the expanding United States economy.

Understanding the past is one thing. Being a proactive investor in a current recession is another and we need to ask what if anything can be done to better position our portfolios during the bad times?

To answer this we first need to not look at current returns as a permanent loss of capital, but rather a temporary hole that you will eventually crawl out of. The market will determine the overall depth of the hole, but we can do something about the depth of our own hole. It's a dirty job, but climbing out of a shallow hole is easier than climbing out of a deep one.

Restructuring an already structured asset allocated portfolio can help. Under weighting riskier investments such as small cap equities and increasing weighting in short term or international bonds may help. Paying off margin and raising temporary cash will also cut volatility. This often can be done by a 10% decrease here, a 5% increase here. If the portfolio is truly structured, it has already taken into account recessionary periods and probably doesn't need major overhaul.

Secondly, look at the recession as a potential buying opportunity. Remember "buy low, sell high?" Recessions offer the window to get into good companies that for a variety of reasons have been caught in the downturn. You can be reasonably certain that people will buy high priced motorcycles in the future and major banks will continue to thrive.

Lastly, unless your portfolio has an extremely short term time span or your rent money is invested in the market, don't move everything to cash. This is an attempt to time the market and if no one through history has ever been able to complete this task, there's no reason to believe you will be the first.

No one ever told you that investing was a straight climb to the top. There are hills and there are valleys. A recession is a valley. If you are dedicated to the climb, get used to the terrain.

All performance referenced is historical and is not indicative of future results. The Dow Jones Industrial Average is an unmanaged index which cannot be invested into directly.