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.

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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.