The stock market sell-off deepened on Thursday. Rising interest rates and inflation fears played the villains again, as investors ran for the exits.

The Dow Jones Industrial Average, S&P 500 and Nasdaq all closed sharply lower today. The U.S. benchmark 10-year Treasury yield rose to 2.83%, its highest level in nearly four years.

The main indices are now about 9% from their all-time highs. Their 2018 gains have evaporated. Popular large-cap stocks, especially in technology, got hit the hardest. Great earnings didn’t save them. More than 10% of S&P 500 stocks are now in a bear market.

Before I dissect today’s dismal numbers, a word about fear.

Conquer your fears…

I love to fly helicopters. It’s a passion of mine. That’s me, in the cockpit of a Sikorsky S-300.

One recent Saturday, as we prepared for take-off, my flight instructor could see that I was nervous. (Any pilot who tells you that he never gets nervous is a liar.)

My instructor said to me: “Just remember, the fear of flying is different than the risk of flying.”

He meant that the anxiety of what might happen is often greater than the odds of something actually going wrong. His advice occurred to me today as I watched stocks plummet.

The bull market started in March 2009, making it the second-longest in history. Younger investors have never experienced a crash.

I’ve been consoling the tearful Millennials in my family who never fully grasped the risks of investing. They seemed to think that stocks could only go up. They’re licking their wounds. They’re now terrified of the stock market. They vow to never invest again.

I’ll give you the same advice that I’ve been giving them: Calm down! Quality stocks gain value over the long haul. Putting your retirement money into stocks is safer than you think.

Sure, there’s turbulence along the way. Just as there is in flying. But the markets always recover from rough patches and go on to reach new highs.

Revving the engine…

Weighing on stocks today was a positive jobs report. The Labor Department said jobless claims last week dropped 9,000 to 221,000. That’s near a 45-year low. Economists had expected a reading of 235,000. It was the second straight weekly decline in claims. The U.S. economy added 200,000 new jobs in January. The jobless rate remains at 4.1%.

Unemployment is at a 17-year low. Wages are rising. Gross domestic product growth is strong. The upshot: Investors fear an overheated economy. Tax cuts will rev the engine hotter. Inflation may ensue, prompting the Federal Reserve to hike rates more often than planned.

The rise in Treasury yields has triggered the worst week for stocks since January 2016. Fear is rampant. The CBOE Volatility Index (VIX) has been soaring. On Thursday, the VIX spiked more than 25%.

But bull and bear markets come and go. If you put your money into well-managed companies, they’ll be fine 10, 20 or 30 years from now. A stock that temporarily drops by double digits can still be a long-term growth company.

Stay cautious, but don’t be fearful. Assess the real risks, not the imagined ones. Once you’ve bought a stock with solid fundamentals, remain patient. Don’t get rattled by the inevitable ups and downs.

Another pearl of wisdom from my flight instructor: “Gravity! It’s not just a good idea. It’s the law.”

This sentiment, too, can be applied to investing. Time-tested laws govern the financial markets. Overvalued stocks eventually find their proper valuation — it’s the law.

Thursday was a bad day. But a pullback was long overdue. Stick to your strategic goals. Bargain hunters will eventually put a floor in the market. Buying opportunities lie ahead.

Thursday Market Wrap

• DJIA: -4.15% or -1,032.89 points to close at 23,860.46
  
• S&P 500: -3.75% or -100.66 points to close at 2,581.00
  
• Nasdaq: -3.90% or -274.83 points to close at 6,777.16
  

Thursday’s Big Gainers

• GrubHub (NYSE: GRUB) +27.45%

Food delivery firm’s customer base soars.

• Coty (NYSE: COTY) +14.07%

Beauty firm beats on earnings.

• Twitter (NYSE: TWTR) +12.19%

Social media platform posts first-ever profit.

Thursday’s Big Decliners

• Quantum (NYSE: QTM) -29.89%

Data storage firm investigated for securities violations.

• NuStar Energy (NYSE: NS) -19.17%

Energy transporter slashes distribution.

• Canada Goose Holdings (NYSE: GOOS) -16.68%

Outerwear maker’s earnings disappoint.

Letters to the Editor

“How do I pick the right mutual fund manager?” — Bill C.

To find the fund manager that fits your needs, examine the fund’s prospectus to evaluate:

• Variability and consistency of returns;
• Absolute returns, past returns, and returns on a risk-adjusted basis;
• Performance in the context of the fund’s asset class and in the context of its peer group;
• Performance relative to the appropriate benchmarks, including the up and down market-capture ratio (how much of the positive/negative rates of returns the portfolio manager is capturing);
• Amount of assets under management and the amount of time (in years) required to rack up a positive track record; and
• The consolidated asset size (not the individual transaction fees).

Worried about the market crash? I’m your co-pilot: mailbag@investingdaily.com

John Persinos is managing editor of Personal Finance and chief investment strategist of Breakthrough Tech Profits.