A significant cause for the massive drop today is that indicators out of China are that the disruption is much, much larger than anyone accounted for.
A few days ago there was a guy talking about refinancing his house and putting 20% of the value into the market[1]. He asked whether it was a bad time. I said it was a bad time -- not that it was going up or down but that there is enormous uncertainty and a long way to drop -- and got moderated down to the gray. The non-gray comments were all that this is a great time. Buy 'em on sale is a claim that has been foolishly made again and again.
No, it isn't a great time. Anyone deluding themselves that there is a market "bottom" that it is bouncing off of has been proven wrong repeatedly. Over the past couple of days the federal government has done more to try to fix the markets than they did during the entire housing crash, but compressing it all into a weekend. They have essentially nothing left.
And here we are, staring into the abyss.
Things will improve, and at one point we'll laugh about this and consider it all an overreaction, etc. But there's a lot of downside between now and then. And if history is any example, once we bottom out we'll hang around for a while.
[1] Oh add that we have historic debt levels, bubbled house prices in some areas, and the simple idea of financing the current, elevated value of a house seems risky.
