Those actions were taken in the context of lower consumer confidence, among other reasons. Consumer confidence has been on the decline since September of 2000. The impact of this decline on investors will depend on their proximity to retirement or other life events for which financial plans have been formulated, as well as any actions taken during the decline. Of significance is whether declines in account value are realized or unrealized. Realized losses are those reflected with an actual sale.
Unrealized losses are paper losses for declines in the value of investments still held.
Persons who made investments in the latter part of 1999 or early 2000 that liquidated all or part of those investments probably realized substantial losses. Persons who used a margin account to fund purchases likely had margin calls that required the liquidation and realization of losses. The positive side to a severe correction is that some opportunities for future appreciation are created with investments that have suffered substantial declines in value. Using a value orientation, many investments can be bought cheaply relative to the market, and have good growth and earning prospects. Based on past history, the action by the FED should mean that the end of the market decline is near.