Understanding why and how the market moves can entail a steep learning curve – especially for new investors. After all, why should a stock like Kenneth Cole Productions gain 15.86% on a day when the company saw no news whatsoever (1/14/09)?

It’s easy to become flustered by a market that doesn’t make sense. Just keep these things in mind when you’re stressing out about what’s going on on Wall Street…

1. Newsflash: The Market is Fickle

The market is fickle and it’s driven by people – a dastardly combination. Tons of individual investors don’t realize what moves the market… we do. It’s simple freshman economics: supply and demand at its finest, and when people get crazy it can get out of control.

Especially recently, the market seems to move wildly on ANY news whatsoever… that U.S. Airways flight that landed in the Hudson river today after a bird strike? Thank god it didn’t happen during trading; the market probably would have closed down around a million points. (How else can you explain why the story landed on the front page of TheStreet.com?)

When you come to terms with the fact that the market’s fickle, you’re ready to take on the next step…

2. Trust Your Strategy

If you’re a growth or value investor (like I am), then what’s there to freak about? While stocks may swing wildly from day to day the bottom line is is… in the long term, stocks are driven by events.

Earnings, mergers, management shakeups… they’re all events. Bad foreclosure rates aren’t. Neither are jobs numbers (unless you’re talking about the number of months Steve Jobs will be sitting out at Apple… that’s an event). The point is this – no matter what happens in the daily grind of the market, know that your strategy (be it growth, value, GARP, or whatever) is supposed to hold up to it.

3. Be a Robot

While hard to do, cold unemotional decision-making is the thing that most individual investors need to come to grips with. Heck, most institutional investment managers need to come to grips with it too. It’s difficult to part with a stock that you think is a winner, but numbers don’t lie, and when it’s time to let go, SELL it! (See #2)

4. Place Stops

Ah, the stop loss order… a great way to protect yourself if things were really to get bad (a la October). Use them, and use them frequently.

While this list is merely intended as a general guide to getting a grasp on why the market’s crazy, it should at least help you get a foundation going. More suggestions are welcome in the comments.

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