Dow Jones officially in a bear market

Now, I try to avoid play-by-plays of the markets just because there are so many people who do it much so better than me. However, this is an occasion. The Dow Jones is officially in a bear market, which is characterized by a 20% decline. With the S&P500 and the Nasdaq flirting with a similar classification, there is a great deal of uncertainty in the market right now. Understatement of the century, right?

As the economy goes through an incredibly volatile period and is flirting with stagflation (high inflation, limited growth, high unemployment), it kind of makes me feel...that really...it's about time. It's about time this uncertainty reached the mainstream and played its toll on the markets. With high inflation, central banks have no choice but raise rates to keep it in check. However, a recessionary environment is best fought with lowering interest rates. Not since the 1970s have so many brilliant men and women been so doubtful of what the central bank should do. It appears there's no clear answer. With these issues with liquidity (our "credit crisis"), we're learning as we go along.

Remember, although a recession has been declared by many pundits, it has not yet reached a consensus yet. With the second quarter over, companies are beginning to come out with their second quarter earning's numbers. Perhaps with this, we'll be able to assess our two consecutive quarters of declining GDP (and, hence, declare a recession).

Remember, folks, be brave. For every recession, there is a recovery. As retail investors, we have to be concerned with the long-term and not selling on weakness. Hang tight. If you guys have an Investment Policy Statement and a full financial plan, you have all the insight you need going forward. The more transparency in your relationship with your advisor, the more confidence you have in your portfolio during uncertain times.