The worst feeling in the world comes when liquidity vanishes. When you must sell and you can't, then fear and anxiety replace the self-assurance and certainty of better days. Shrinking liquidity often escalates into panic. Liquidity can disappear in any market and requires major downward price adjustments. Prices simply evaporate and losses become unbearable.
Panic selling overwhelms the market.
Given what can happen and what has always happened to investors at the end of past credit expansions, extensive stock market exposure seems reckless. With huge losses in world markets, enough red flags are in the wind to go on the defensive. The extent of the current destruction of wealth in Asia defies comprehension. What you can gain today in stocks compared to what you can lose, doesn't match up. Small investors have generally always been wrong.