This came from a Financial Planner today.  I thought it was worth repeating.  Especially the part about 90% of us going to work every day still and doing our jobs.

Darkest Before the Dawn 

To Our Valued Clients:


It goes without saying that we have experienced one of the most turbulent markets in our nation's history.  The economy has slowed, unemployment is rising, GDP is slowing and the stock market, measured by the S&P 500, has fallen over 50% from its highs in October 2007 as of the date of this writing.


Many investors are reaching a point of capitulation, saying "Enough already!" and dumping their stock portfolios at fire-sale prices for fear of any further near term declines.   Fundamentals and long-term focus have gone by the wayside as emotions have taken control of the decision making process.


Contrary to popular belief, the world has not yet come to an end.  Each morning the sun comes up and 90% of us go to work, buy gas, groceries, clothes, and personal items.  We pay our cable bills, gas bills, eat at restaurants and watch movies.  While we are certainly deep into a prolonged recession, this recession, like all others, will end.  It is easy to say 'It's different this time,' which is of course true.  Each recession is unlike previous recessions, as they all stem from different causes.  Many people have come to compare our current environment to the Great Depression. We can say with full certainty that this difficult time, although trying, pales in comparison to the Depression.  Unemployment is currently around 8%, while during the Depression it peaked at 25%.  Real GDP declined 30% during the Depression, while in 2008 Real GDP actually increased 1.1%.


In spite of the most recent declines, the economic news has not been all bad.  On Monday the federal government released data that showed consumer spending increased 0.6% in January, following a slight gain of 3.6% in 2008.  The Institute for Supply Management's manufacturing index rose in February after 12 months of declines.  Today, March 3rd, the Treasury department released $26.2 billion to state and local transportation authorities for infrastructure spending, money that will put people back to work.


It is normal to feel that you must 'do something' in a period where your current strategy doesn't seem to be working.  However, moving to cash 'until the smoke clears' has historically provided investors only with a chance to sell low and buy high.  The most important thing an investor can do in this market is stay focused on the long term.  While the diversification that we have long employed has not eliminated losses, several fixed income asset types have provided positive 12-month returns and are helping to provide investors with liquidity until this storm passes.



M.J. Smith and Associates is an Independent Registered Investment Advisor

Securities offered through Raymond James Financial Services, Inc.

Member FINRA/SIPC