I believe the overall trend of the stock market turned down well before the Gulf crisis erupted. Fundamentally, stock prices reflect the prospects for corporate earnings, and given the economic circumstances I listed above, it's hard to be optimistic about the near term outlook for most companies. Bear markets typically play out in three phases. In the first phase, stocks drift lower for no apparent reason.
Most investors believe the sell-off is a normal consolidation before a further advance.
In the final phase, stocks fall because people are dumping them to raise cash. Nobody wants to own stocks any more. Today we're moving from the first to the second phase of this bear market. There isn't anything like enough fear around for this to be the final days of a bear market. In the recommendations section I'll discuss specific targets we can use as benchmarks for making stock-related decisions in this market.