Keep calm and buy when there’s blood in the streets

Financial markets are characterized by long cycles with many ups and downs. Successful investors block out fear and sensationalism and recognize that these market cycles are part of investing. In practically every bull market of the last 40 years, the U.S. stock market has experienced a correction during its rise. The Dow posted its worst one-day point drop in history today (though not its biggest percentage drop). It was a classic panic-selling scenario. Here’s what you should do about it: 1) Know your history Since 1900, the U.S. has seen 125 corrections of 10% or more, which averages out to about one per year. (A correction is defined as a 10% pullback, and though we haven’t reached that territory yet, we may be headed there.) Since 1980, the stock market has had positive annual returns in 28 of the last 37 years. With that perspective, if your investing time frame is years or even decades from now, it may be best to hold tight and stay invested. Of course, there’s no guarantee that durations of future recoveries will happen in a similar time, or at all. But unless you have a need for the money in the short term, it