Sitting at my desk yesterday a compadre asked "You see the Dow today"? In 20 seconds I had looked online, and sure enough, the Dow had dropped 200+ points. Some people sounded like lost kids at an amusement park. I calmy reminded them that they weren't pitching fits when the market went up 1, 2 or 3 percent in one day, why should they act stupid on a big down day?
As many people have pointed out, it had been over 900 days since the last day the Dow dropped 2% in one day. For nearly three years, investors had not faced a big down day. For small timers like myself and my coworkers, a sense of peace had developed. The Bull market had kept chugging along and had never had a big down day. Some people had even wondered when the Bear was going to show up, so why scream bloody murder when it does.
Is a Bear around the corner? Yeah. It's only a matter of time before the all time high corporate profits return to the norm, and the American consumer can only bail the economy out of so many jams. We have a negative savings rate in America today, and yet consumer spending keeps growing. That cheap money is going to start to dry up, and when it does the chips will fall. I recall saying in college that I felt a recession would "suck" as I was getting ready to enter the job market, but it was needed to allow the normal cycle of business and economics to continue. The recession we had earlier this decade has been debated by economists about it even being a recession. The American economy never went through the burn out and rebirth phase that occurs naturally. As painful as it is, it needs to happen. America needs to feel pain once more so we can create a new industry or technology (or multiple technologies) to lead the next wave of growth. This was pretty disjointed, but we as a country need to change a bunch of things if we want to continue to live a high standard of living. We've done it before, and we can do it again.
As far as investing, if you thought the market was a decent bet a few months ago, take the opportunity to buy during this dip. With your long term accounts like IRAs and 401ks, remember that you will not touch this money for 25-35 years. The market goes up, the market goes down. Life goes on.