If appropriately chosen, your commitment to your investment portfolio should also be very long term – daily, weekly, quarterly or even annual changes in valuation are really irrelevant. Just because you can revalue and transact daily doesn’t mean it is a productive thing to do – in fact, we would argue it is more likely to be counterproductive to both your financial and mental health!

Unless your circumstances or objectives have changed, a serious look at the ongoing appropriateness of your portfolio once a year should be more than often enough.

5. Remember that past collapses have all felt like the end of the world

A common characteristic of almost every bear market is a mental projection that this is the end of the world as we know it. It has been said that the four most dangerous words in finance are "this time it’s different". These words are most often uttered in the midst of market manias and market collapses.

For a trip back though history, we quote a recollection of the conditions experienced in the market collapse that occurred in the early 1990’s.

At that time, the Anglo-Saxon economies of the US, Canada, the UK, Australia and New Zealand were all either in or flirting with recession.

The recession came on the heels of an era of financial excess, as exemplified on Wall Street by the junk bond king Michael Milken and in the movies by Gordon "greed is good" Gekko.

In the US, excessive and imprudent lending for real estate had contributed to the failure of hundreds of community-based ’savings and loans’ institutions, triggering a multi-billion dollar government bailout.

In the United Kingdom, consumers who had leveraged themselves heavily to real estate suffered a severe blow when rising interest rates pushed house prices sharply lower, both in real and nominal terms.

In Australia, too, market deregulation had given way to an era of increasingly reckless lending by financial institutions, which until that point had had little experience in managing risky commercial loans.

The consequence in Australia was the failure of a number of major financial institutions, including the state banks of Victoria and South Australia, the Teachers’ Credit Union of Western Australia, the Pyramid Building Society, merchant banks Tricontinental, Rothwell’s and Spedley’s and the Estate Mortgage trust.

At that time, the crisis seemed intractable and insoluble. Journalists and economists talked of systemic breakdown and a global challenge for market capitalism, much as they are now.

Now, while no two market crises are ever the same, it is fair to say there are parallels between today’s downturn and the events of early 1990s, particularly in the damage caused by excessive leverage and insufficient oversight by many financial institutions of the risks they were taking on.

We recommend that you take a moment to reflect on the path of the Australian share market over the past 27 years by reference to the attached chart. Additionally, for those who wish to go back further in history we have included a link on our website that compares US bear markets of the past century. Hopefully, it will provide some perspective to the current situation – unfortunately, we can’t say when this downturn will end. [3]

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