But, I have been thinking about the depth of this correction.  Technically, it is not a correction until the market has fallen 10%, and I’ve been expecting a 5-10% dip.  However, in addition to a normal, healthy correction, the market is getting hit with worries about emerging markets.  This suggests it may be a 10-15% correction, instead of a 5-10% one.

This is one reason.  So far this year, the Dow is down about 7%, while the S&P is only down 5%.  The small and mid-cap stocks are down even less.  In other words, the mega-big multi-national companies are getting hurt worse than smaller companies, reflecting their greater exposure to emerging markets.

That suggests the Dow is only halfway down, and some people will undoubtedly lose some sleep, which is unfortunate.  At this rate, that means another month of bad news.  It also suggests that growth investors should hide in small caps for awhile.

The good news is that there is still no evidence of a financial crisis, maybe a currency crisis or even a good old-fashioned recession . . . but no financial crisis . . . Whew!