Suppose you went out to your garage late one night and saw a huge snake coiled up in the corner. If you grabbed a shovel and gave it a few good whacks, you might feel pleased with yourself. But if you turned on the light and found that you’d just cut your garden hose in half, you might feel a little sheepish. Unfortunately, too many frightened investors are taking a shovel to their stock portfolios right now. Worse still, their investment advisors are goading them on.

There are a lot of scared investors out there right now. That’s why gold prices closed up $70 yesterday and US stocks got slammed.

However, Oxford Club investment director Alexander Green says allowing fear to dictate your investment decisions is asking for trouble. This credit crisis looks like it will be extremely painful, but the worst thing you can do now is panic sell. If you investing in solid companies, they will still be solid companies when this crisis is a distant blip on the radar.

Instead, investors need to stick to a simple plan: Buy quality, diversify assets broadly and think long term.

Americans’ views on the general state of the country have hit an all-time low, with 81 percent saying the prospects for the United States are declining… the worst-ever number for this barometer. Some will argue that this just reflects the current economic slowdown or the monumental unpopularity of President Bush.

Take everyone over 15 in your household to see Addison Wiggin’s new movie I.O.U.S.A. at your local theater, says Investment U’s Alexander Green. Alexander says the documentary, which tackles the issue of the record $53-trillion U.S. national debt, is “an eye-opening experience” and “a wake-up call.”

Back when I was still managing money 10 years ago, I had a client who transferred in a rather sizable account. There was only one problem. Over 90% of his net worth was tied up in a single stock, Ericsson (NASDAQ:ERIC). He refused to use a trailing stop or sell a share of it or even to use a position sizing strategy.