Investors and advisors gathered in Toronto on Wednesday evening to hear words of wisdom on investing during times of volatility, and on a day when stocks in Toronto plunged more than 600 points, the advice was timely.

The key message from Wellington West Holdings Inc. CEO Charlie Spiring: use common sense. He said all too often, investors forget the key principles behind investing, and let emotions drive irrational investment decisions.

This is evident in the current financial crisis more than ever, as a result of 24-hour media coverage that highlights each swing in the market, and technology that allows investors to buy and sell stocks at any time of day.

“Too much information and rapid technology have made people very dangerous to themselves,” Spiring said.

He outlined six strategies for investing in volatile markets. First: Follow the leader. He advised investors to choose a high-profile investor with a track record –Warren Buffet, for instance — with a style suited to them, and watch where such leaders invest during turbulent times.

“When is the smart money coming into the market, and when is the smart money exiting the market?” Spiring asked.

His second strategy, called Core + Explore, suggests allocating 60% to 100% of a portfolio to core assets –long-term holdings that aren’t adjusted during short-term market swings, and up to 40% of a portfolio to ‘explore’ assets — shorter term investments that are “rented, not owned,” Spiring said.

Explore assets could include such investments as commodities or technology companies — investments that are slightly riskier, but poised to perform well in the near-term. The allocation between the two asset types should depend on an investor’s risk tolerance, Spiring said.

His third strategy is to “cover the call” during bear markets such as the current one, by buying and selling long-term call options, since they provide the most money for an out-of-the-money call, he said.

“Don’t get sucked into short-term calls,” he said, adding that it’s typically unclear when the market is going to turn around. “It’s a fundamental mistake.”

The fourth strategy Spiring recommends is rather than putting an entire chunk of money into GICs, investors should put an amount that covers their cash flow needs for the year into Treasury bills, and invest the rest in preferred shares of blue chip companies—the “new 80/20 rule.”

Spiring said while preferred shares are modestly more risky than GICs, blue chip companies offer less risk than common stock. He said they offer higher returns, and are currently particularly attractive since the market is down and they are cheap.

“For a tiny bit more risk, you get a way better return,” he said.

Spiring’s fifth investment strategy in volatile times is for investors to hedge their strengths, by hedging a particular portion of their portfolio that is invested in a sector they are worried about. He said this could be particularly helpful short-term strategy for investors who hold long-term investments in financials, energy, gold or REIT stocks.

The sixth strategy on Spiring’s list is to own dividend paying stocks, and particularly ones with dividend growth rates. “You want companies with a high propensity to increase their dividends,” he said.

Spiring finished by reminding investors that markets always correct, and they correct in both directions.