One day, you may be enjoying an ordinary morning when you check your portfolio and find that many of your holdings are down 5% or more. Yikes! If many holdings are down sharply, there probably isn't much specific terrible news about any particular holding -- instead, it's probably that the whole market, as measured by the Dow Jones Industrial Index or the S&P 500, has dropped sharply.

The more the market drops, the more many investors panic and sell stocks they own. That can send stocks down even more, fueling further selling. It's generally best to not follow the crowd and not worry. Here are three reasons why.

Every stock market investor needs to understand that the stock market is volatile, and "corrections" (drops of 10% to 20%) and "crashes" (drops of 20% or more) will happen -- and not infrequently. The good news is that while these corrections and crashes can sometimes be sharp and severe, they often don't last that long.

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