It's like trying to tee off while fighting wind, rain and rough grass: Today's volatile economic situation has many investors thinking about hitting the 19th hole and sitting this round out.

At first glance, it's easy to see why:

• Home foreclosures rose 57% in March, the 27th consecutive month of year-on-year increases.
• The subprime mortgage crisis has rocked the credit markets, most recently resulting in Federal Reserve's bailout of investment bank Bear Stearns.
• Crude oil prices remain above $100 a barrel, cutting into Americans' disposable income and increasing business costs.

The bursting housing bubble, the credit crisis and increasing oil prices are hitting investors' portfolios hard. The Standard & Poor's 500 (S&P 500) Index, for instance, has declined almost 20% from its Oct. 9, 2007, high. That's an amount that typically signifies a bear market.

"For all practical purposes, the United States is now in a recession," says Orie L. Dudley Jr., Northern Trust's chief investment officer. "Until the core economic shocks — housing, oil and credit — to the U.S. economy begin to abate, we expect to continue to see volatility in the equity markets."

But in investing, as in golf, if you don't play, you can't win. And recessions are hardly the time to duck into the safe haven of fixed income and flee the equity markets altogether.

Keep your eye on the ball
Do you hit a wedge or a 9-iron? Go for the green or lay up? Strategy is the foundation of success for investing as well as golf. And in investing, the best strategy is based on your time horizon, risk tolerance and life goals — not on which way the wind is blowing today.

Market timing may or may not work for day traders. But for serious investors with a long-term horizon — five or more years down the road — changing strategy with each market dip can wreak havoc with your financial plan.

"Instead of chasing short-term performance, we would rather focus on minimizing volatility, which increases performance over the long term. The best way to do this is by diversifying your investments through a strategic asset allocation plan," says John Skjervem, who leads Northern Trust's national investment management practice and develops the firm's private client services investment policy.

"This is a more reliable way to maximize long-term return potential."

If you jettison your plan because of short-term losses, you'll likely end up selling low and then, when you're ready to re-enter the market, paying too much. That's expensive in the short and long term.

A better approach: Refine your swing and keep your eye on the ball.

Maintain a steady swing
Letting turbulence trump logic is like trying to time the market — unless you're very lucky, you'll end up missing all the opportunities.

If you've built your portfolio based on a sound asset allocation plan tailored to your specific timeframe, risk tolerance and goals, your best bet is to stay the course. But if you want to do something to ensure your portfolio is well positioned to ride out this recession, think small.

Rather than abandoning your game entirely, focus on your swing. Determine what adjustments you can make based on the current economic situation within your overall investment strategy.

Reassess your risk tolerance. If you're feeling very uncomfortable with your portfolio's short term losses, or worried you may be compromising your long-term goals, you may have overestimated your willingness to take on risk.

"Investors tend to overestimate their risk tolerance when the markets are performing well," says Skjervem. "Bear markets tend to make people more realistic."

If you're feeling "more realistic," don't overreact. Meet with your financial advisor to reassess your appetite for risk, and make subtle adjustments, if needed, in your asset allocation.

Reconsider your short-term goals. Based on historical returns, your financial advisor can forecast the likelihood that your portfolio will recover in time for you to achieve your long-term goals. But you may need to reconsider the timing or scope of your short-term goals.

Making speculative, high-risk plays are more likely to damage your long-term prospects than to bring you short-term gains. A better approach is to decide whether you can wait another year or two to buy that new yacht you've been dreaming about, or if you're willing to settle for a 30-footer instead of a 40-foot boat.

Talk through your inflation worries. The Federal Reserve's repeated and sometimes unexpected interest rate cuts coupled with a falling dollar has many investors concerned about inflation. If you share their worries, discuss your concerns with your financial advisor and agree upon reasonable inflation assumptions.

With solid assumption about inflation risk in hand, you can determine how to position your portfolio to address that risk. Commodities investments — particularly gold and oil — are popular among investors seeking to hedge their portfolios' inflation risk.

Assess your exposure to the financial markets. Your advisor can also help you examine the specific companies and industries within your portfolio allocations.

For instance, overall earnings were down in the fourth quarter of 2007. But after excluding financial companies, overall earnings were up 14%.

You might consider making tactical shifts to minimize your exposure to the troubled financial sector without abandoning your overall equities allocation.

Take advantage of the low value of the U.S. dollar. While a declining dollar can increase the risk of inflation, there's another side to the story. Within your overall asset allocation strategy, you may want to ensure your portfolio includes companies that benefit from a declining dollar — those with large exports or that are headquartered outside the United States.

Go global. In addition to benefiting from a weaker U.S. dollar, international equities offer further diversification to help minimize the volatility your portfolio is exposed to. While many European countries also are experiencing credit market problems, Asia and other developing economies continue to prosper.

Don't overshoot the green
Whatever you do, though, don't overreact.

Equities often perform well during a recession. The S&P 500 Index has, on average, gained 10% during the previous nine postwar recessions.

Besides, despite the problems, we're beginning to see signs of economic hope.

We may be approaching the bottom of the housing market, for one thing. The stock of vacant single-family homes is expected to decline by more than 400,000 units during 2008. And the latest National Association of Realtors' report on existing home sales showed better-than-expected results.

In investing, as in golf, a consistent position helps you develop a consistent swing. So this is the time to take the long-term view and work with your financial advisor to tweak your swing. You'll soon be reaching the short grass.