Ride it out if you are not close (5 yrs or more) from retirement. I'm doing the same. Once I was convinced (mid Jult) that the sub-prime was going to blow like we are seeing, I moved 25% (one 401K fund) from a fund that was 25% vested in financials into a bond fund in attempts to preserve some capital, which it did. through the end of 2007. Late, but, the time was for me to that in March, '07.
I'm riding it out with 25% overseas still, 50% domestic stocks, and 25% bonds with 15 yrs till retirement. We just don't have as many options as I'd like in out 401K choices. I figure it'll 4 years to see real growth again overseas and would be very pleased to see a complete recovery by the end of '08 for the domestics.
Don't make decisions for yourself on what I think, listen to several sources and do your homework. Buying medium NAV's and selling low is a guaranteed loss every time. Wish out 401K had more real estate exposure. A good move to buy low soon in the summer or 18 months out.....just my take.
Sounds like you have a good approach here. For my personal "liquid" portfolio, I moved to a 40%-40%-20% stock/bond/cash split last year -- since I may end up using a lot of this for a major purchase in the next few years. In my 401(k) account I'm at 75%-15%-10% stock/bond/cash split, with the bond portion weighted somewhat higher for all new money entering the account. I'm 30+ years from retirement.
I'm dollar cost averaging into everything, too . . . so I'm buying on a monthly basis regardless of whether the market is up or down.