Welcome back, panic! After a few days off, it's back: The Dow fell more than 500 points this morning, and 10-year Treasury rates hit an all-time low below 2%. (On that note, if you're one of those willing to lend money to the government for a decade at less than 2%, shoot me an email. We need to talk.)

What's driving the sell-off?

Standard caveat: Who knows. Markets do crazy things. More than 60% of total volume is done by high-frequency computer trading operating off of brainless algorithms.

But a few things stick out.

The past two weeks have understandably shaken confidence. Mutual fund outflows last week hit levels not seen since late 2008 -- although ETF inflows likely offset those figures. Fund giant Fidelity says its customer call volume spiked 50% last week. TD AMERITRADE (NAS: AMTD) says it processed more than 900,000 trades last Monday, with four out of five days last week hitting record levels of trading activity. Many were buying. But if the market is any guide, plenty were panicking.

Panicking over what? The worry du jour is that we're heading into a new recession. This morning, the Philadelphia Federal Reserve released a gauge of manufacting activity now at its lowest level since March 2009:


Source: Philadelphia Fed.

Does this guarantee a recession? No. But it's unmistakable that the economy has slowed in recent months.

Still, don't let any of this push you into panic. As my colleague Todd Wenning said this morning, "Some might see a Bloomberg machine flashing red as a 'panic' sign, but Fools should see it as a 'For Sale' sign."

It can't be repeated enough: The best returns are made during the darkest days. If you wait for the economy to get better, or for markets to "calm down," you'll miss the biggest returns. It's always worked that way. This too will pass, and those with a patient, long-term outlook will win. On the bright side, we're 500 points closer to the bottom than we were yesterday.

What do you think about these wild market days? Sound off below.

At the time this article was published Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Follow him on Twitter @TMFHousel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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im done--the market is just to nuts to make any sence anymore

August 18 2011 at 3:36 PM Report abuse rate up rate down Reply

The rich is still not satisfied with tax cuts..

August 18 2011 at 3:13 PM Report abuse rate up rate down Reply
1 reply to Gumby's comment

"The rich" are up to their old tricks, lending the fruits of their labor to the profligate spendaholics in Foggy Bottom, who mortgage America's future to buy votes from the intellectually defenseless.

Nasty rich.

August 18 2011 at 3:22 PM Report abuse rate up rate down Reply

The Fed is buying old bonds from the rich with QE1-2.. When QE3 comes if so, the rich will cash in hundreds of billons in capital gains straight from the tellers of the Fed!

August 18 2011 at 3:13 PM Report abuse rate up rate down Reply

Bond traders cannot be more delighted with 10 year Tbonds as it is falling below 2% on way to 1% which will meanthat they will double in bond prices in a year or so... It is not about the interest but the bond price that will double in price if interest is halved from 2% to 1%.. This is how the rich get richer without worrying that some sucker will buy their bonds at double prices later on ... then next on to 30 year Tbonds now around 4% what mouthwatering !! cant wait to quadruple ! Will 30 year Tbonds fall to 1% ???? good question! The rich doesnt have to hire you to work for them anymore . They are still makinig money off the Fed !

August 18 2011 at 3:12 PM Report abuse rate up rate down Reply

Good, I hate dirty stocks. Some of the larger stocks may not fit in the tub and will have to use the shower

August 18 2011 at 2:47 PM Report abuse rate up rate down Reply

Didn't I hear the tea party people screaming to get the g..d...
government out of my life? Now I read you people whining that the government needs to create more jobs. Which do you want? Out of work? Start your own business and create your own jobs. Don't expect the government to do everything for you!

August 18 2011 at 2:42 PM Report abuse rate up rate down Reply
1 reply to Jim!'s comment

The government doesn't create jobs, Jim. However, as we've painfully discovered, the government does destroy jobs.

August 18 2011 at 3:13 PM Report abuse rate up rate down Reply

i thought they outlawed computer trading. What happened?

August 18 2011 at 2:39 PM Report abuse rate up rate down Reply
1 reply to cbrown6120's comment

What made you think that?

August 18 2011 at 3:13 PM Report abuse rate up rate down Reply

It's going to get worse before it gets worse.

August 18 2011 at 2:30 PM Report abuse +1 rate up rate down Reply

The DOW is about $11.000. The dollar is down 97% from 1930. The DOW adjusted for inflation then is $330. The DOW then adjusted for inflation is about the same as it was on Black Friday 1929.

August 18 2011 at 2:24 PM Report abuse +1 rate up rate down Reply
Jo Ann

Government and businesses alike need to start brigning the jobs back into the good ol' USA! Let Americans have the jobs lost to other countries and do not let the unions back in! Along with Obama and friends and the unions they are bringing us further into the black hole with no way out!

August 18 2011 at 2:19 PM Report abuse +2 rate up rate down Reply