Be Cool, Everybody Just Be Cool

I don't likely need to tell you it was a bad week for stocks. This kind of thing happens from time to time. I find it interesting the story changes depending on what the fear du jour happens to be. You will remember recent problems in the subprime market were blamed on easy credit. Now they're blaming the market declines on "fears of a credit squeeze." In other words, that loans will be too hard to get. If they'd been harder to get in the first place, there wouldn't have been subprime lending problems. Easy credit is bad, except when it's not. Hard to get credit is bad, except when it's not. Is there ever "just right" credit?
Confused? Don't be. I can't recall the number of times in 30 years I've seen the same explanation for two contradictory events. There's a simple reason for it. These are stories made up by market analysts, talking heads and journalists to fill their various needs.
Talking heads need to tell stories in order to keep you watching until the commercial comes on.
Journalists need to fill the empty space in newspapers and magazines that the paper couldn't sell to advertisers.
Market analysts are hired by brokerage firms to cook up reasons you need to sell what you have to buy something else. If you don't move your money around, they don't make any.
If you are handling your account properly, you have some predetermined percentage in stocks, including real estate, some percentage in bonds, and some in cash.
You shouldn't care what the market does.
That's because you are going to rebalance annually. If one year the market tanks, then when you rebalance, you will add money to stocks, either from cash or bonds, to get back to your original percentage allocation. If one year the market explodes upwards, then you will sell off some stocks and put the excess in bonds, real estate or cash, rebalancing to your pre-planned allocation. That means you aren't always reacting to someone else's bullshxx story. Rather you are acting on your plan.
A second major benefit is that when you sell off some of the securities that went up and buy some of the securities that went down, you are buying low and selling high. This is the world's most sensible market advice that almost no one follows. That's because they're too busy getting greedy or scared at exactly the wrong time.