The S&P 500 is now down more than 15% since its peak in April. I know: Short-term market movements are generally meaningless to follow. Investor psychology, however, is tremendously important.
And consider this: Since the Great Depression in the 1930s, there have been only 20 market "corrections" -- declines greater than 10%, but not more than 20% (which takes the title of a bear market). The market decline over the past two months ranks among the top 10 of these corrections. That's enough to thoroughly rattle most investors' nerves, especially occurring so soon after 2008-2009's sheer obliteration.
For the unluckiest S&P 500 companies, the declines have been downright horrific:
|
S&P 500 Company |
Decline Since April 23 |
|---|---|
|
Office Depot |
(51%) |
|
Anadarko Petroleum |
(50%) |
|
Sears Holdings |
(47%) |
|
Eastman Kodak |
(45%) |
|
Harman International |
(42%) |
Source: Capital IQ, a division of Standard & Poor's.
This is serious stuff. The question I want answered is what's caused this mayhem. Have investors been in denial about the severity of our economic situation and how meager the recovery will be? Or is this all just a giant overreaction and an opportunity to capitalize on shaken nerves?
That's where you come in. Where do you think the market is heading over the next year? Take a moment to share your thoughts in the Motley poll below, and fire off a comment or two if you so desire.
