Q Dear Ms. McGuire: Your portfolio is up 30 percent. Well, so is mine (in my IRA) but it is still way below what it was last year -- in fact, it is closer to what it was about four years ago. Is that a good time to sell? (I'm retired).

PAUL, HOPKINS

A My colleague Kara was busy with her column so she asked me to address this question. It's a question a lot of people are asking after the financial bloodbath of recent years and the rebound in the stock market since it hit bottom in March.

I don't have enough information to give a thoughtful answer on whether you should sell or not. But I do want to emphasize a way of thinking about the issue. Now is a good time for folks like you to take a look at their overall portfolio and ask themselves some basic questions. Did you learn the hard way during the bear market that you had too much invested in stocks? Is your portfolio well-diversified? Do you have too much or too little risk built into your portfolio? (There is no right or wrong answer. For instance, after running through questions like this earlier in the year, I rebalanced my investments but kept the target asset allocation the same. But I know people who are opportunistically taking advantage of market rallies to create a more conservative portfolio.)

Put it this way: We've had two recessions, two bear markets and a credit crunch in a mere eight years. We know that another downturn lurks in our future, maybe a year from now or perhaps in another eight years. Economic downturns and bear markets are as much a part of a capitalist system as expansions and bull markets. That's why my basic assumption is that everyone needs to build a substantial financial buffer against downturns with their savings. That is especially true with retirees dependent on the income from their savings. It's more important to protect your money against the downside than it is to position yourself for growth.

I'd take a step back, look at your income and spending needs and then see if you should make adjustments to your portfolio that fit those requirements. Since no one really knows where the market is going next, the real issue is figuring out your needs and then shifting your money around to reflect that reality.

Chris Farrell is economics editor for American Public Media's "Marketplace Money." Send questions to cfarrell@mpr.org.