Originally Posted by TheSquealer

There are tons of reasons this happens. This is why i'm saying you need a long term plan. It could be an algorithm tweak (they are rolled out 1-2 times a day). It could be that you were linking too fast for those phrases from low quality sites (in which case it will still bounce back over time). It could be that you got pushed down by people that are simply better than you (your site and rankings do not exist in a vacuum).

Plan for the long term. The more you get caught up in short term changes, the more shitty/reactive decisions you'll make and the worse you'll do. Build big. Link slow. Don't stop. Toolbar PR/webmaster tools, how many links show etc has nothing to do with anything. Create a plan, follow it. No one here can tell you with 100% accuracy what happened because there are 1000 factors to consider.