The markets are down again as I write. Not a surprise. This week and next week at least will see more of the roller-coaster ride we’ve been seeing over the last fortnight.

I’m really not worried about it myself. In fact, if I had some money to spare right now I would be looking for bargains to buy. This is a good time for investors (if you’re willing to sit the ride out) unless you have invested in the US sub-prime mortgage market.

This correction has been coming for a while. There has been too much greed and stupidity running the decisions of corporate investors over the last few years. Now the chickens have come home to roost, with the sub-prime mortgage market in America crashing.

One particularly interesting aspect of the current ups and downs is the way dodgy investments are packaged and re-packaged and then re-packaged again all around the world. The main reason why the problems in the US mortgage market are so badly affecting European and Asian banks is that many of them have invested in products relating to this market in some way or other. Debt produces income to lenders (it’s one of the main ways that banks make money) and dodgy debts (i.e. money lent to people who would have difficulty paying it back) can produce truly eye-watering returns for a while at least as the interest rates are so high.

One lender doesn’t carry all the debt though. They wrap it up into an investment product and offer it around to other banks around the world to invest in. Some of these then wrap it again and offer it elsewhere as part of a different investment product…and so the poison spreads.

The problem now is that no one knows who has invested in these products and, if so, how much so there is fear and loathing across the markets with no one trusting anyone else and the flow of money-lending all but stopping in some parts.

It will take a while for things to sort themselves out and for calm to reign again. There is much to sort out though, not just sub-prime-related investments. I think there has been too much lending across the board over the last few years, with banks funding mergers and aquisitions that probably shouldn’t have happened, at least not at the prices quoted. So a shake-down has been on the cards there as well.

The bumpy ride will continue for a while but if you are investing for the long-term, and that includes your pension fund, then this is not a time to panic.

Of course, if you feel differently, comment here – or post a note on our new discussion boards.