China’s Shanghai Composite Index, which had been declining all summer, recently went into a free fall. The Chinese market collapse panicked Asian markets which spread to Europe and then to the United States. Just as in 2009, our retirement plans and future are upset by financial turmoil, but this time by seemingly remote foreign events.

The world has changed the United States is no longer the 800-pound gorilla on the world economic and financial stage. Europe and Asia now rival us in economic importance. And China has surpassed large European countries and the United States in the monetary value of its world trade (imports and exports) and therefore has a larger impact on global growth.

The slowing of China’s economy in recent years has battered emerging markets and commodity producers everywhere. The three-year commodity bust, led down by oil and iron ore prices, has hurt local producers like our own Cliffs Natural Resources. And now, the China slowdown has begun to show up in slowing European and U.S. exports.

In mid-August, the Chinese government surprised investors with a yuan devaluation designed to boost exports and economic growth. Taking this as a sign of government mismanagement, Chinese investors panicked and the Shanghai index plunged. This unnerved the Chinese government and it used its vast financial reserves to buy stocks and loosened monetary policy.

Far from comforting investors, Chinese policy elevated anxiety. China’s trade rivals pushed down their currencies in what appeared to be competitive devaluations and currency markets everywhere were in upheaval. The Chinese stock market appeared to be government managed and Chinese monetary policy might result in an out-of-control flood of Chinese money.

The United States, almost alone among large industrialized countries, has recently enjoyed recovering economic growth and stable inflation. Seemingly this should have isolated us from trouble abroad. But we live in an inter-connected world where violent market swings can come from anywhere. Moreover, the looming interest rate hike in the U.S. is causing destabilizing capital outflows from emerging markets. All of this has heightened investor fears.

Financial advisors, with a focus on long-term value investing, tell us not to panic or lose sight of the basics. Over the decades, they have developed a number of strategies that help the individual investor survive market volatility.

These lessons are by now well-known approaches for dealing with market unpredictability. These include: asset diversification (cash, cash equivalents, stocks, bonds, real estate, and commodities); diversification by company size (small, medium and large capitalization); and, geographical diversification (U.S., international and emerging markets). Not always, but usually, rising and falling markets will offset each other insulating our portfolios from disastrous declines.

In fact, the astute investor should be buying stocks on market declines and “dollar cost averaging” down. This has been market maven Warren Buffett’s not so secret formula for success.

Importantly, we need to control fear. When behemoth institutional investors (exchange-traded funds, mutual funds, hedge funds, private equity, etc.) decide to sell, they typically move as a herd. The small investor will get trampled by their superfast trading systems if we try to sell in market panics. The classic strategy has been to hold tight and wait out the storm. We can do this by dipping into cash or cash equivalents when we need money.

Similarly, attempting to “time the market” (buying the lows and selling the highs) seldom works in the long run for the non-professional investor. Experience has shown that the small investor is better off buying and holding a portfolio of quality companies, mutual funds or low-cost market indexes. The peace of mind gained from this strategy will allow us to ride out market volatility and to sell on market up-cycles when retirement or other financial needs arise.

J.P. Morgan, the nineteenth century banking magnate, was once asked what the stock market will do. He answered wisely, “It will fluctuate.” And, as retail investors, that is all we can know about markets they will fluctuate. Although the world has changed, increasing our risks, the methods for dealing with unpredictable market swings have not, and it is best to stick with the time-proven strategies.

* Data facts are taken from the International Monetary Fund’s, World Economic Outlook.

Editor’s note: Jesse Wright is a Ph.D. international economist who has worked in global financial markets his entire career. He has taught economics and finance at Northern Michigan University.