How to respond to shocking world events

In the face of tragic events, like those in Japan, or momentous political change, like that unfolding in the Arab world, it is natural for investors to wonder how they should respond. Many people are tempted to run for cover, an understandable response to dangerous situations. But history tells us it is usually far better in those circumstances to hold steady and allow the market to work for you. Just make sure your portfolio is properly structured at the outset.

The following interview was produced by David Booth, Chairman of Dimensional Fund Advisors, in January of this year--long before the events that have so recently shocked the world.