Roger Nusbaum submits: The decline today seems kind of predictable. Well, I did not predict it but a lot of folks did call for some snap back, which came last week, followed by more selling. Today we have more selling.
While I would not want to have zero exposure to equities, I do think the returns we will see will seem disappointing. My prediction for year end of 1180 to 1219 for the S&P 500 still feels right to me which would not be the end of the world. The volatility of the last few weeks, despite still not being that high, will probably lessen in the next few weeks.
I discount the probability of a 20% decline in very short order (be it one day like 1987 or a few weeks like 1998). So many of today's investors have lived through those other declines and I think are very worried about something similar coming now that I just think it is unlikely (gut call here with no science).
A milder decline is more conducive to a bear market, which is also not the end of the world but rather is a part of the normal stock market cycle. If this plays out, you will have time to reduce exposure, and if it is incorrect and the market goes up a lot you can capture most of that move provided you do not try to outsmart the market.
So far my only sales have been of holdings that grew too large. I have more cash raised but am not positioned in such a way that I will be completely left behind in the face of a massive rally.