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The long-expected decline in the stock market may now be underway.
Monday's drop makes it five days in a row for the venerable Dow Jones Industrial Average (.DJI). The market's tumble from its recent peak is a bit over 4%.
It is true that the Dow's down days are far from a record. So is the percentage drop-off.
However, it comes after a nervous start to the new year, which follows a rather impressive gain in 2013. It also follows a number of warnings many market followers have issued since the end of last September.
That's when investors first started to get really nervous. The main issue at that time was what to make of the Federal Reserve's monetary policy and its guidance for future actions.
Then there was the question of Fed leadership. At that time, Fed Chairman Ben Bernanke's successor was not yet known, and everyone knows that the stock market hates uncertainty.
Speaking of which, the long-running squabble inside the Beltway was another source of angst on the Street of Dreams. However, the market soon adjusted and pressed onward and upward.
By the end of November, however, more edginess appeared.
Small investors started to ask whether it was time to sell. They were becoming aware of the magnitude of last year's gains — not to mention the fact that the Dow more than doubled from its low point in March 2009 at a time when the overall economy grew barely 10%.
Even though the market was becoming increasingly overvalued by most traditional measures, a plethora of buyers kept pushing stocks ever higher until it became obvious that many players were ready to take some money off the table.
Who knew that they would take the table as well?
The main culprits in today's decline are concerns over domestic earnings and a slowing in the economies of several major developing countries, China being the prime example.
As for earnings, so far this season, disappointments seem to be outpacing positive surprises. And the Fed has begun to cut back its easy money policy by reducing its purchases of bonds, thus causing interest rates to rise.
Although cheered by savers and retirees, higher interest rates are anathema to housing, which has already begun to soften. They also make stocks less attractive, especially when combined with slower earnings growth.
Although they've outpaced economic growth for several years, earnings have gone about as far as they can go without help from the economy. And if December's weak employment report is any guide, this help may not be available for a while.
As for fiscal policy, the government's budget deficit continues to shrink, both in absolute terms as well as in relative terms. And we just learned that the debt ceiling will have to be dealt with earlier than expected.
The good news is that, despite the selloff, stocks are still near their record highs.
The bad news is that there has been no correction of at least 10% since October 2011.
After all, stocks need a correction every once in a while to give new money a chance to get on the bandwagon. At least that's what your broker will tell you.
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