First off, I have no idea what is the going to happen on Monday when the market opens.  The market may open ugly. IMG-20160214-WA0003Some sort of corrective action in the market should not come as a huge shock.

Every valid investment strategy goes through periods of under-performance (relative), or draw-downs (absolute). The question is how you deal with it. One key characteristic of frustrated investors is that they jump from strategy to strategy. The first sign of weakness forces these weak hands to jump ship at just the wrong time. In short, following a strategy is easier said than done.

Ben Carlson at A Wealth of Common Sense also notes how our fear of losses, or loss aversion, affects our ability to invest successfully. He writes:

Crashes, corrections, draw-downs, losses, system resets or whatever you want to call them are a feature of the financial markets, not a sign that they are broken. These things have to happen every once in a while for the system to function Continue reading