The Dow drops 530.94 points in one day…

And you're going to say a reasonable person should do nothing? Yup.

Markets go up and markets go own, but in the long-term, they go up. Quite a bit, actually. Three years ago, the 16,459-point Dow that is causing us so much anxiety today was 13,172. Five years ago it was 10,854.

Will the market continue to go down? I have no idea, but if you’re feeling like you should do something, read “Take Some Deep Breaths and Don’t Do A Thing,” Ron Lieber’s article in last Saturday’s “New York Times.” I also have a few thoughts that might be useful right now.

  1. Chances are, you are not 100% in the stock market. If you have a diversified portfolio, you also own bonds. Bonds can go down, too, but in most cases, they tend to “cushion the blow.”
  2. You haven’t lost anything until you sell. Hopefully, you have a cash reserve and you don’t have to sell right now. If you’re invested for the long-term, you still have time before you will need that money.
  3. Market timing doesn’t work anyway. If you sell now, how will you know when to buy? The answer is — you won’t. And that will cost you.

Still feel a need to do something? Do a reality check on your portfolio. Are you diversified? Do you have enough cash to wait out a downturn?

Most important — do you have a long-term plan?

I believe your portfolio should be designed to help you reach your personal goals. If your goals are easily reached, you should be a conservative investor. If your goals are a reach, you will have to invest more aggressively. Or change your goals. That’s the kind of critical information you can only get with a financial plan.

If it’s time for you to get a long-term financial plan — or update the plan you have — this is one area where you definitely should act decisively. Choose an hourly planner — someone who doesn’t sell any financial products, and can be 100% objective about you, your goals and your investments.

The markets will continue to move up and down, but with the right plan, and the right planner, you’ll feel confident that you’re moving ahead.

I look forward to hearing from you.