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People are freaked. Asia's been smashed. Europe is in the toilet. And the US recovered yesterday from an early morning swan dive thanks to the Fed's 75 bp easing, yet the credit markets aren't exactly buying it (I mean, has anything really changed in the wake of more accommodative Fed policy except to telegraph their deep concern over the state of the economy?).

In short, the "deep crap" scenario I've written about many times is now clearly playing out (notwithstanding my friend Mr. Kedrosky's missive about the excessive bearishness of financial stock bloggers), and it is at times like these when some clear and powerful messages need to be repeated to keep those among us from doing colossally stupid things (like selling low and buying high, which is part and parcel of the human condition).

And if there is one message I'd like to suggest, three particularly sage words that are sufficient to guide our actions during the most difficult of times, I'd like to share the following wisdom uttered by Steve from that fine kids show, Blue's Clues:

Stop. Breathe. THINK.

Seriously, is anything more complicated needed for most of us right now? I don't think so. So let the elephants stomp and the angels cry and celestial bodies spin backwards on their axes for a while. It's just not worth getting all in a froth about things.

If you are diversified, that is. If you have all your money in a high vol stock which is exhibiting tremendous downside volatility at the moment, well, you haven't been reading this blog and I can't help you. But if you do have a modicum of diversification, some stocks, some bonds, some cash, some real estate, a little gold and energy ETFs here and there, and if your time horizon is more than a month or two, you'll be ok. And by all means lay off the CNBC and Fox News for a bit - it will give you an ulcer. Even give the business page a rest for a few weeks. Or maybe a few months. Or more.

Pull out the New York Times crossword, sharpen your skills, read a good book and hold on. Because the financial markets won't be in turmoil forever. And your portfolio will benefit from listening to that prophet Steve that has been telling your kids the exact same thing. Whether you are trying to cope with anger and frustration towards a friend, a parent, a sibling or the financial markets it is all essentially the same. Staying cool and resisting your negative impulses will set you free.

Source: If You're Diversified, Sit Back and Relax