The market’s now in a bona fide correction, with the S&P 500 Index – and virtually every other equity index -- plunging below the 200-day moving average. In fact, as of this morning, approximately 90% of the stocks in the S&P 500 were trading below their respective 200-day averages. If we look at the chart here of the S&P 500, we can see what a rapid correction actually looks like -- and it looks ugly.

It’s hard to believe that the index was above 1,350 in early July and, as of this writing, the broad measure of the domestic market traded just below 1,140. That’s a correction of nearly 16%. By the looks of things, the damage isn’t over yet.

During market periods such as this, I’m reminded of the wisdom of one man very close to my heart. He’s my father, Dick Fabian, and he developed a brilliant, yet ultimately simple, way to make sure investors are out of the market when the selling gets heavy, and back into the market when the proverbial coast is clear.

Dick always instructed investors to look at what the market actually was doing, and not what they thought the market might do -- or what they wanted the market to do. That’s why he developed the trend-following strategy that remains at the crux of the Fabian investment philosophy. Dick knew that if you could be in the market when the trend was decidedly higher, and then out of the market when stocks were declining, you would preserve principal and grow your capital regardless of market conditions.

This philosophy wasn’t born out of some theoretical experiment. Rather, it was the painful losses Dick suffered during the devastating bear market of 1973-74 that prompted him to seek out a better way for investors to manage their serious money.

Though this plan has proven itself many times over the years, it always seems to me a little uncomfortable whenever we get a new sell signal. Our latest sell signal came on Aug. 2, when the S&P 500 was trading at about 1,260. Even as the sell signal came, I was worried that the market would rally and create a whipsaw. Of course, this didn’t happen. In fact, subscribers to my Successful Investing advisory service got completely out of the market and into the safety of cash based on that sell signal, and some well-placed stop-loss orders.

The effect has been a near-complete sidestepping of the downside that we’ve seen in stocks since our sell signal. That downside amounts to another 10% decline in stocks since then and there is no telling where this market will finally bottom out and reach support.

Right now, I think the chances of a descent into another bear market are about 50-50. Yet even if we do bounce back and escape official bear market territory, I think the action over the past two weeks should give every investor pause. It also should tell you that without a sound plan in place to make sure your money is safe, you could be in for some real portfolio damage.

If you’d like to find out how the Fabian Plan has protected investors just like you for more than three decades, then I invite you to check out my Successful Investing advisory service today.