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Doggonit, here we are again. Another 700-point decline for the Dow Jones.

It was just days ago investors were euphoric over the 900-point rebound, and now we've retraced our footsteps back to the embarrassment of Dow 8,500. As an investor said during the dot-com bubble, "I don't worry about volatility. I worry about down."

The VIX "volatility index" gives us a clear picture of just how erratic things have been. The gauge jumped 25% yesterday to end at 69. During normal times (remember those?) the index typically sputters along in the teens. Before this past week, a high mark might be somewhere in the mid-40s, such as the one hit during the Asian currency crisis in 1998.

It sits just under 80 as I'm writing this. Read that again: just under 80. Get the picture?  The markets are completely besieged with panic. And not just panic, unprecedented panic, at least in this generation.

Energy companies that just a few months ago were lambasted for making so much money are tanking double digits by the day -- ExxonMobil (NYSE: XOM  ) and Chevron (NYSE: CVX  ) both fell more than 12% yesterday. Heck, even after getting eleven-figure capital injections and guarantees on senior debt, banking giants like Bank of America (NYSE: BAC  ) and Morgan Stanley (NYSE: MS  ) plunged 10% and 16%, respectively, yesterday.

No doubt about it, it's big, ugly mess out there. The big question on everyone's mind now is, "What do I do now?"

First, don't panic. Seriously. Don't.

A century ago, J.P. Morgan (the man, not the company) was asked a straight-forward question: "What will the market do?"

"It will fluctuate," he said -- with a stone-cold face, we can imagine.

And it's true: No one really knows what markets will do in the near term. Regardless, the old maxim of "Buy good companies at sensible prices and hold them for a long time" is as true today as it's ever been. Years from now, no matter where the overall market is, we'll look back and wonder how we could have been so blind to miss the babies being thrown out with the bathwater over these past few weeks.

We'd love to get your take on how you're handling these tumultuous times. Specifically, we'd like to know: Are you still invested in the market, or have you cashed out and gone into bunker mode? Take a moment to take part in our Fool poll below, and feel free to share your stories in the comment section below.

What now? The Motley Fool is here to answer your questions about this financial crisis. Send us an email at, and check back at as we answer your questions and cover the latest on the Panic of 2008.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Bank of America is a Motley Fool Income Investor recommendation. The Fool has a disclosure policy.

Read/Post Comments (31) | Recommend This Article (29)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 16, 2008, at 12:34 PM, SteveTheInvestor wrote:

    Yup, the poll pretty much says it all. I can now estimate with some certainty that the vast majority of readers (of those taking the poll at least) are well under 50 years old. Either that or they are extremely careless with their money.

    I've always suspected that to be the case anyway, so it's not a surprise.

  • Report this Comment On October 16, 2008, at 12:46 PM, RetiredEarly05 wrote:

    Until I retired, I always toughed out the bears. Market timing is a chump's game. But, I was 60% in stocks a year ago. Have cut back to 15% over the past year and saved my retirement capital. I'm bullish long term. I'll get back in over the next two years. I'll miss the big upswing that will no doubt happen one day, but I already have enough. Why would I risk losing it? In a market that jumps 11% up and down day to day? Might as well bet it all on commodity futures. Good luck to all. . .

  • Report this Comment On October 16, 2008, at 1:08 PM, MellowGuy1 wrote:

    I'm retired, fully invested in equities, and will wait out this decline just like I waited out the decline after 9-11-2001.

  • Report this Comment On October 16, 2008, at 2:07 PM, knighttof3 wrote:

    Steve: They might be both (under 50 and careless :-)) However, unless we really shift to an out-and-out socialist regime, or if the CxOs keep skimming off the top more and more (like investment banks that blew up, where 50% earnings went for salaries and bonuses instead of shareholders); they should be fine. This meltdown is a crisis of confidence, isn't it? So in plain terms, let the wusses get out, let the timid and weak banks go under. There is no natural or man-made famine (or war or pestilence etc) that has caused this panic.

  • Report this Comment On October 16, 2008, at 5:26 PM, twdonner wrote:

    If I look at todays current value of my way down! But if I just look at the number of shares I still own in great companies......unchanged

  • Report this Comment On October 16, 2008, at 5:27 PM, ricej1969 wrote:

    I love these bargain prices. I just started investing in the stock market earlier this year so I don't have a lot to lose but a heck of a lot to gain. I'm using The Stock Advisor for a guide and I trust it to get me through this rough time.

  • Report this Comment On October 16, 2008, at 5:44 PM, aussiewatcher wrote:

    So - someone tell me.

    Are these wild swings being caused by humdreds of thousands of investors coming and going?

    Or is it a few people playing it up and down?

  • Report this Comment On October 16, 2008, at 6:10 PM, novahosting wrote:

    Should have cashed out periodically over the past year. Not now though. I went through the '87 "crash" relatively unscathed. Just wish I held on longer back then. I won't make the same mistake today...though I wonder why those gold mining shares are still biting the dust. Oh well.

  • Report this Comment On October 16, 2008, at 6:47 PM, Bikerjim wrote:

    I wasn't smart enough to get out, but I hope CAPS can help me know what to hold on to such as Host Hotels, (HST)which my bank advisor bought for me at $22.11 and is now about $8.62.

    Advice from Motley Fool or anyone????

  • Report this Comment On October 16, 2008, at 7:11 PM, bigbubba49 wrote:

    Buy low, sell high.

    Can't sell high right now, so there is nothing to do but buy low. Every month I buy or add a little to a couple of positions, keeping commissions under 1%. I bought a little CX and CEO today. They might be cheaper tomorrow, but they might never be this cheap again.

    In the past it has sometimes been hard to find really attractive investment ideas; maybe I wouldn't buy anything for a month or two. That has not been a problem this year.

    Ever since I started, in 1998, sometimes I think, "I shouldn't buy that stock just yet, if I wait I might be able to get in for a lower price." For me, at least, that hasn't been a particularly useful thought.

    Maybe the market will be down another 700 points next week, or maybe it will be up 700. The DOW went up 900 points Monday. It could do that for two or three days in a row...

    In this market, I am a blind man groping through the fog. I get nowhere by standing still, so I keep buying -- bottom fishing -- cautiously but steadily.

  • Report this Comment On October 16, 2008, at 9:51 PM, TMFSelzhanik wrote:

    I'd like to complain that the survey doesn't have a combination of choices #1 and #2. My ideal response would read:

    I'm watching in utter amazement, using every bit of cash I have to buy what fearful (and highly leveraged) owners are selling, at prices that I never thought would be so low. The volatility pleases me, somehow making my procrastination in buying anything over the past year pay off.

    And while I might be smiling a bit that certain hedge funds are collapsing, I don't think I'll be laughing, as there are some otherwise optimistic people really losing big money, being forced to sell at these crazy prices (Hello, Aubrey and Bahram). Or just selling out of fear, which I wouldn't laugh at either.

  • Report this Comment On October 16, 2008, at 10:14 PM, ttropics wrote:

    Good article, amongst many. I think another choice in the poll would be good though: Yeah, I'm holding, and I would love to buy right now or soon at these very low prices, but I'm BROKE because we're in a recession!

  • Report this Comment On October 16, 2008, at 11:38 PM, ease1 wrote:

    The Foolish thing to do is bargain hunt if you can. There are some great value producing companies out there at bargain prices who have been caugh up in the panic. They will be back and now is a great time to get them cheap.

    However, I certainly understand the arguement that if your close to retirement, backing down might be a better strategy.

  • Report this Comment On October 17, 2008, at 8:13 AM, pondee619 wrote:

    These two options are the same:

    " I'm watching in utter amazement, but haven't bought or sold anything just yet.

    I'd love to buy at these bargain prices, but I want to conserve as much cash as possible right now in case the economy gets much worse."

    Where is the option:" I'm watching in amazement, haven't sold and am nibbling at the fringes the bargans that come along. things may get worse, but I'd like to be in at some of these prices."?

  • Report this Comment On October 17, 2008, at 8:19 AM, JFund wrote:

    Stock prices reflect the near term. The perceived strength of the economy has been lowest in decades; however, times will not always be this bad. In believe those who invest now will make a killing in the next five years.

  • Report this Comment On October 17, 2008, at 10:17 AM, QuirkyDi wrote:

    I sold financials late last year and have pared off slowly over the last few months.

    Selling aapl, tmo, srcl, dna, and rigg last week broke my heart.

    If there was ever a time not to allow greed to rule, this is it. I'm extremely bullish over the long term unfortunately, 7416 is my prediction for a bottom. At that point I'm going shopping.

  • Report this Comment On October 17, 2008, at 10:42 AM, RaulChapin wrote:

    this is a great opportunity for the youngsters and middle aged guys. I am 31 and while having "lost" 30% or so on my index funds, i figure if in 34 years I cant recoup that money and make some, the market will be the least of my worries... the world as we know it would have come to an end :)

    this week i am thinking of buying shares of a mining company trading at a P/E of 4 or something like that. The company I work for works for them and they seem like a very strong company. Those shares are the Xmas gift for my 4 year old son. If they don't grow in 61 years... i have no idea what will :)

  • Report this Comment On October 17, 2008, at 11:29 AM, catfishstock wrote:

    I have never traded in the market and the 40s are passing me by. I watched the housing boom of the eighties and watched it crumble like Rome. Exciting stuff! I'm in!

  • Report this Comment On October 17, 2008, at 11:57 AM, RAWHIDEROCKY wrote:

    How can all you Fools. have any money left to Buy these "Bargins".

    Bargins that are going down, with no end insight.

    My biggest earner this year and last Mastercard. Is at half it's value today.

    I'm glad I sold, on the way down to this ugly market. Didn't give it all back.

    If nothing is moving on sound fundimentals, only Hedge Funds dumping positions. How can you pick a winner?

    Don't tell me just to Gut it out, when the Guts are on the street.

  • Report this Comment On October 17, 2008, at 12:15 PM, ricej1969 wrote:

    This comment is for RAWHIDEROCKY. I personally have money to invest from making money in my job. I invest each month no matter what the market is doing. Yes, all of my stocks are losing money right now, but I believe that I bought solid companies which will bounce back as well as the stock price. Most of this fallout is because of fear and the credit crunch (which will be worked out). I'm 39, so I have time to ride this out and make plenty of money.

  • Report this Comment On October 17, 2008, at 12:16 PM, LindseyKay wrote:

    I'm 22 and just got to where I have enough money that I can do things other than feed myself and pay rent. I've been doing some research the past couple months because I'd like to get what little I have to work for me. I just started contributing to my 403b this month and I've got some old and new safe investments. Since I have so little something safer than the stock market would probably be more reasonable but the risk could be worth for the opportunity that is avaliable now. I haven't bought yet but I'm seriously contemplating it. I won't put up anything that I can't afford to lose but the pain of losing what I've worked so hard for has kept me out so far. I'm trying to talk myself into it.

  • Report this Comment On October 17, 2008, at 5:07 PM, misterrock wrote:

    I'm 39; I have been waiting for this for years!!! My divorce was recently finalized, I am no longer paying for a lawyer, everything I own is paid for; I am so in!!! I couldn't have dreamed up a better time to get into the market. I have been investing an amount equivalent to the amount my ex-wife would be wasting, and I am riding this volatility out to the end. I love rollercoasters!!

  • Report this Comment On October 17, 2008, at 8:03 PM, Benoliwal wrote:

    I don't have a lot of money in the stock market. I've already lost half of what I did have but gained some back by selling and picking another recommended stock. I have no crystal ball so my choices of stocks are based on recommendations and how some analyst see a particular stock. I'm of retirement age almost, but there will be no retirement so I will see what I can make during this volatility.

  • Report this Comment On October 17, 2008, at 8:39 PM, SideShowMel0329 wrote:

    The end of last week is when I turned bullish. I've got about 40% of my worth in the market now (I'm usually around 20%). In other words, I strongly believe now is the time to buy.

  • Report this Comment On October 18, 2008, at 10:30 AM, jdefili105 wrote:

    I am 46: 20yrs ago I did not have the wealth to take advantage of the market when it was down..but the Buffits of the world sure did! with stock prices this low it's a once in a lifetime opportunity for any body that invests long term..Walmart prices on Neimem Marcus would have to be a * fool *not to see that. human beings are panicky animals..the strong patiently wait and take advantage of a good opportunity.

  • Report this Comment On October 18, 2008, at 10:33 AM, Binge827 wrote:

    Since we are not yet in a full recession, predicting the end is not possible. Many parts of the economy are still degrading. Consumer buying, housing starts, autos, and manufacturing are areas of big concern for the next year or two. Continued declines in these areas will deepen and lengthen the on coming recession. Are stocks cheap now? Only if companies can sustain their profits under these circumstances. And logic says that isn't going to happen.

    Conclusion: Stocks are likely going to get cheaper.

  • Report this Comment On October 18, 2008, at 2:59 PM, TrailerParkJawa wrote:

    I'm 37 and bought a condo earlier this year which is looking to be a terrible decision. I should have rented for a year to see how things unfold. I'd like to buy stocks but dont have any free cash that I'm willing to risk. If I had more cash I'd hold on to that too because a bad economy puts jobs at risk. I am continuing to contribute to my 401k and I do have a very small (a few thousand) amount of $$$ to look for a single bargain or two.

  • Report this Comment On October 18, 2008, at 5:47 PM, DrBob66 wrote:

    There is a good reason that the volatility if so high these days...people are scared. Considering that there are TRILLIONS of dollars of credit derivatives on the books of so many financial institutions around the world (and no one knows if they're going to blow up in the near future, and REALLY wreck the credit markets), I'd say that fear is warranted.

    In addition...currently, stocks are not that cheap relative to historical trough levels. This market could easily go significantly lower. Dipping a toe in right now is probably not a bad idea (especially if they're paying a juicy dividend)...but I wouldn't go all in at this point (especially if you're a buy-and-hold type.

  • Report this Comment On October 19, 2008, at 5:06 PM, robbglass wrote:

    Focusing on long-term value, I nibble on MDP recommendations. As fate would have it, I started investing in early September, so I'm down 25% ( principally CX, AIB ) and seeking to double-up and additionally diversify.

    Ever the optimist and girding for more hefty positions, I remain reservedly up-beat.

  • Report this Comment On October 21, 2008, at 8:38 PM, bohootch wrote:

    I'm 66, been retired (mostly) for 15 years. I got down to 25% equities a year ago avoiding greed after a nice run since 2002. Now I am much less than that. My rational is that "we haven't been here before" therefore the old charts don't apply. Really don't want to go to work again (for money that is). So I'll give it 6months to a year to see where the bottom is and to try to understand what the hell is happening. Then I'll work my way back up to 25-30% equities via mutual funds.

  • Report this Comment On October 22, 2008, at 1:42 PM, BenThereB4 wrote:

    When the global markets had a downward bump in February, 2007, I spent a few weeks reading about the nascent problems in the credit markets. In March, I started selling and going short. By May, I was net short the market, mostly in homebuilders and financials. By July, I was 100% short, meaning my net worth went up 1% on days that the markets went down 1%.

    I have slowly taken profits on my shorts, and I turned net long in late September of this year.I was way too early, and I have lost 5% of my net worth. I am still up 150% on my brokerage account since May, 2007. I am currently 80% cash, and the rest in covered-call long positions. I bought some stocks on the morning when the Dow went below 8000. I think I might have another chance to buy as low or lower. I am keeping plenty of powder dry.

    One of my favorite commentators, John Hussman, went relatively bullish two weeks ago. I wouldn't be shocked to see another bear-market rally, but I don't feel compelled to trade it.


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