Phew!! Today there was a break in the market direction and the markets closed solidly higher at a record one day up move giving a much needed sign that the world indeed was not coming to an end. On Friday I received 7 calls or e-mails from clients telling me someone close to them had bailed on the markets that day indicating that to some extent we might be getting close to that “throw in the towel” stage.
Was this the bottom? Is it over now? No one can be sure until months after the fact but I would continue to expect both up and down days in the markets with high volatility. The economic problems will have good and bad news days and the negative emotions will take some time to dissipate. To me discipline means doing the right things for the right reasons. Patience means to do the right thing when it takes longer to realize the objective than you thought. Courage means to use your discipline and patience even when all the people around are not. Historically investors who showed discipline, patience and courage have been rewarded through exceptional returns over the long-term.
Here are a couple of other thoughts on the subject.
“Keep your money in the market” is an excellent piece authored by Burton Malkiel, author of “A Random Walk Down Wall Street” and professor of economics at Princeton.
Philip Brewer offers some valuable information on financial panics.