My 401k is diversified to the point where this didn't kill me. Still down like 20%, but it could have been WAAAY worse. Plus I'm a good 20+ years from retirement, so whatever...plenty of time to rebound.

The funny thing is that I took a decent sum (about 30%) from my 401k to add to my downpayment on my first house about a year and a half ago. I was bummed about the penalty and taxes I had to pay...at the time anyway. Now it looks like a genius move. The money I took out would have been diminished by the aforementioned 20%, while my house was purchased for $23k under asking price, and has since appreciated (lucky that this area hasn't been hit very hard by the housing mess).

The economy is cyclical. Unless someone is very close to retiring there is plenty of time to make up the losses.