Fear over concerns about sovereign debt default and a worse than expected U.S. initial claims report helped to push commodity and stock markets lower on Thursday. Risk aversion drove investors toward safer, lower-yielding assets to the benefit of the U.S. Dollar.

Fear can manifest itself in many ways and I don’t see fear dissipating any time soon. What should long term investors do? I think an analysis of previous bear markets will be helpful. You may be surprised to know that bear markets in the mold of the 1929 Great Depression are actually a blessing in disguise for investors.

The brutal sell-off in financial stocks over the past couple of weeks smacks of the kind of real fear typically seen during the capitulation phase of bear markets. While the underlying problems that created this maelstrom are real, the market is behaving as if every domestic financial institution is at risk of failing--which is simply not true.