When the Dow sheds 300 points in a day, it's natural to feel doomed. And when the market surges, it's easy to be convinced that stocks have entered "a new paradigm," to echo a bubble-era phrase. Don't delude yourself. As Sir John Templeton notes, "The four most expensive words in the English language are, `This time it's different.' "
To keep your perspective, remember:
- In every bull market since 1970, stocks have dropped by 10% or more at least once. Average time to get back to even: 107 days.
- Over time, markets tend to stick close to their long-term trends, called "regression to the mean." Manias and panics never last.