Depression? Not likely ...

Here is the Wall Street Journal's take on the issue. Yep, you've got to go read the story on the other side of the link.

Furthermore, U.S. nonfinancial companies have just under $1 trillion in cash on their books. Even though Wall Street is dead, innovation is not: In the months to come, clever new financial go-betweens will spring up and find a way to get that cash flowing again. It's hard to see how a depression could get under way when so much capital is waiting in the wings.

There is this as well ...

"Diversification is dead." There's an old saying that the only things that go up in a down market are correlations -- the tightness of the linkages among various assets like U.S. and foreign markets, stocks and bonds, commodities or real estate. Normally, one asset will tend to zig while another zags. But in bear markets, they converge -- and in really terrible bear markets, they move in complete lockstep.

That's what is happening now, but it will not last indefinitely. It never does. While diversification does not work all the time, it does work over the course of time. There's nothing wrong with raising a little cash if that would prevent you from panicking completely. This is particularly true for retirees. Whittle down your stock position gradually, in baby steps -- say, 1% at a time -- not in one fell swoop. And set a limit beyond which you will not go; otherwise, when stocks stage their inevitable recovery, you will miss out.

If you're like me, you'll ride it out. It's about the only thing you can do, but it's the only smart, sensible thing to do as well.