Published: Monday, 6 Oct 2008 | 10:31 PM ET

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By: Carlo Dellaverson
Web Producer

The continued beating being administered to the stock market is startling, and not just for day traders and institutional investors. Even if you couldn’t tell a ticker from a price target, your regular investments – including retirement accounts – are affected by the gyrations in the market.

On Monday, CNBC’s own Jim Cramer made a dramatic recommendation on the TODAY show: Pull out any money you have tied to stocks that you may need in the next five years. It’s just too dangerous right now to count on short-term gains.

So should the average investor with money tied to the market – whether it’s through a 401(k), mutual fund or other asset – take this turmoil as a sign to get out? Not so fast, says Joe Terranova, a Wall St. veteran who joined Carmen on Monday night’s show.

The most important thing the everyday investor can do, according to Terranova, is know his or her own balance sheet. He advised people to literally fill out a spreadsheet with their assets and liabilities. What do you want to hold onto? What can you afford to hold on to? What can you drop from your portfolio if you need to raise capital? Answering these basic questions will make your investment decisions easier.

But don’t just run away from the market, Terranova said. Fear is prevailing over fundamentals right now, but it won’t forever and making money decisions in the heat of the moment is always a reckless move. That said, arm yourself with the knowledge that prices may stay deflated for some time to come. Terranova predicted the recovery could take as long as 36 months, but if your investments are in it for the long haul, three years is nothing.

If you do plan on rebalancing your portfolio to weather the storm, he suggested investing in three sectors: energy, natural resources and food. The global demand in these areas should continue, even if our economy continues to sputter.

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