Reaction to 5/6/10 Stock Market Plunge

At 1:40 PM (CST), something unusual occurred:  I watched the stock market ticker.  Most of you know that we have a long term perspective and watching the day to day market fluctuations, much less the intraday movements, has little to no appeal to us.  Nevertheless, I happened to be looking up the current price of a position and witnessed the drop of the Dow Jones over 600 points in the space of 60-90 seconds, then rebound approximately the same amount a few minutes later.  For about one minute, stock market investors were collectively about $1 Trillion less wealthy – at least in theory.  As I reflect back on that moment, it occurred to me that there was no panic or anxiousness internally.  Why?  For one, I know that our clients are well diversified according to their risk tolerance.  If they pay more attention to how they fared personally rather than to the media, they will see that they weathered the microburst within their tolerance.  But more importantly, 2-3 minutes out of 5-20 years is but a blip.  Short term market movements become smaller and smaller deviations as time passes.  The lesson:  be diversified, rebalance regularly, and ignore the media calls to panic.