If you truly believe in the companies that have gone down already, the only logical move is to pour more capital into the stock. This is sometimes extremely difficult to do as it is hard to maintain cash reserves in case of a downturn. This is one way to reduce risk, which will also lower return, but always leave you with enough money to make moves during a market downturn. The most frustrating thing is being tied up in down positions and unable to do anything because you have no liquidity. Part of the risk of investing is what's called liquidity risk, and that has never been more obvious than with the failings of some of the banks and most notably, Bear Stearns. An individual's liquidity risk is based on how liquid their investment holdings are. Typically, the order sorted from most liquid is checking, savings, money market, CD's, and then goes to longer-term investments from there. Stocks are considered less liquid because there are typically transaction costs (significantly reduced/eliminated by Zecco) and there is no federal agency backing the amount (ie FDIC).
Back to your question on what to do with down investments: If you put more capital in now, you are buying more shares at your higher perceived value. Ex: You bought 10 shares of a company for $1,000. You bought the shares for $100 each because you thought they would report a good quarter and you firmly believe in the long-term success of their business model. They don't report a good quarter and the general market downturn means the new price is $83. Oh my, now a second infusion of $1,000 would buy 12 shares of the stock. You would have more than doubled your position by merely "doubling down" (doubling your amount of capital invested). When the stock goes to $120, as you believed it would based on your solid analysis, you would now make $640 dollars on $2,000 invested. Without doubling down, you would have made only $200 on $1,000 dollars invested. 32% vs. 20%. There is a theory surrounding this idea sometimes called pyramid investing. Nothing to do with pyramid schemes. The pyramid simply represents the amount of capital you put in at any given price. You start with a small position and if it goes up, you let it run until you feel it is time to sell. If it goes down a certain percentage, you put more in, and if it goes down additional percentage you put even more in. I wish I had a whiteboard but the concept is that if your stock keeps going down, if you put more and more capital in, if it just comes back to where you originally thought it was worth buying, you'll make a bundle of money.