If you've recently checked your fourth quarter 2007 investment statements or paid any attention to the news, you're probably a bit unhappy with how things are going in the stock market lately. In the last part of 2007 we generally saw stocks headed down. In some cases, the fourth quarter alone resulted in a 3%-10% loss for many investors, and 2008 hasn't been much better.

It can be easy to become frustrated with a down market, but it is important to keep things in perspective before making any major decisions. First, you want to consider performance in terms of the past few years, not just the past few weeks. While we've had a rough few months, what has the market generally done over the past five years? Actually, the S&P 500 has realized an average annual return of 11% over the past five years. That means that if you had $10,000 invested in an S&P index fund starting in January of 2003, you'd have just over $18,000 today. That is an 80% return from just five years ago.

Look at the Big Picture

When you think of it that way, the five or six percent you probably lost last quarter doesn't seem so bad, does it? This is what you have to keep in mind when you're investing for long-term goals such as retirement. We often get complacent when we consistently see positive returns quarter after quarter and year after year, and the first sign of a negative return sparks fear and concern. Before getting too excited, remember to stop and take a look at the big picture and see how this really affects your investments.

The worst thing you can do is make a major investment decision based on a relatively short period of poor performance. The market won't always go up, and if you try to get out every time things are a bit gloomy, you're just trying to time the market. For most people, timing the market simply doesn't work when it comes to long-term investing. Instead, you should stick to your investing plan, keep a proper asset allocation, and hold for the long-term.