Watching a fall-out like we've witnessed on Wall Street is never easy. But the real pain will be when you actually open your mutual fund or 401(k) statements.

You're about to see losses that could make you sicker than the last financial statement.

During the third quarter, mutual funds that invest in stocks saw the worst percentage decline since the fourth quarter of 1987.

"Unless you're exclusively in bonds, you're going to be pretty disappointed when you get your statement in the mail," said Russel Kinnel, director of fund analysis for Morningstar Inc.

And even an all-bond portfolio won't make you feel rich. The average gain for taxable bond funds was about 2 percent in the third quarter.

The real losses were in stocks. The average stock fund lost 17.5 percent in the third quarter -- short of the 21.05-percent drop in the fourth quarter of 1987, according to Lipper Inc. , a mutual fund tracking group in New York.

"There's no question that this is the worst period for this generation," said Bob Bilkie, president of Sigma Investment Counselors in Southfield.

"It's born of panic," he said.

Yet after 30 months of a bear market, the trick is not to panic.

So this week's No. 1 assignment: Look at your statements.

"People are literally not opening the mail," said Don Cassidy, senior analyst for Lipper in Denver. But "ostriches don't make money."

It's time to open your eyes, think about your goals, and consider rebalancing your investments to meet those goals.

What are some options?

Consider selling some stinkers -- and reinvesting the money elsewhere.

If the money is invested outside a 401(k) plan or IRA, you could save some money in taxes by taking a loss.

Say you invested $10,000 in an Internet fund and it's now worth $1,000. If you sell it, you could have $9,000 in losses to cut down on income taxes.

You first must take capital losses to offset capital gains, said Patricia Bojanic, tax partner for Gordon Advisors in Troy.

Then, if your capital losses exceed your capital gains in a year, you can take a maximum of $3,000 in capital losses to reduce ordinary income in one year.

You can carry forward additional losses to future tax years.

If you want to sell and then buy back the same fund at a lower price, pay attention to one important rule. It's the wash-sale rule.

Your capital loss is not deductible from your income taxes -- if you sell a stock or mutual fund and then buy back the exact same stock or fund within 30 days after the sale. And the rule says you cannot buy the same stock or fund within 30 days before the sale.

"What they don't want you to do is recognize the loss and buy it right back," said Mark Luscombe, principal analyst for CCH Inc. , a tax advisory firm in Illinois.

Get real.

What seems to be pretty clear is that the stock market is not going to double your money soon.

"It's going to be a gradual comeback rather than a sharp one," Cassidy said.

If you've lost a lot of money, it's important to build your savings back, even if you have several years until retirement.

Think about paying down your credit card debt. Cut back on spending. Could you save more money by giving up weekend trips? Or giving up sporting events?

A quick fix might seem be to bail out of stocks completely and go to bonds. But that's not smart.

"You're basically selling low in one asset class (stocks) and buying relatively high in another asset class (bonds)," Cassidy said.

Start diversifying now.

Many people figured they'd wait until summer when tech stocks rebounded to start unloading their tech-heavy holdings.