As of October 10th, the S&P 500 is down 37% for the calendar year, a decline unmatched since 1931’s slide of 43%. And unlike the crashes of 2000-2003 and 1973-1974, diversification into different asset classes has not reduced the carnage. International and small stocks have been hurt even more than the U.S. blue chips. There is a massive crisis of confidence leading to doubts about whether individual companies will be able to survive the lack of credit to run their businesses, the latest such victim being General Motors, which on October 10th lost one-third of its market value.
