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In the arcane terminology of the financial sector, what we have seen in the past 10 days of trading is the death throes of a bull market and the awakening of a bear market.
It's not pretty, but it's certainly not a crash. The local market has shed
7.1 per cent since the start of the year, about 13 per cent since it hit an all-time high in October.
In 1987 the US Dow Jones Index shed 23 per cent in a single day.
Technically speaking, the experts don't even call it a bear market until it has shed 20 per cent. But the situation is serious enough that the term is already being bandied about.
There is little evidence to suggest that we've seen the worst out of the US yet and, unfortunately for New Zealand investors, our market remains intimately entwined with Wall St.
So a bear market is well and truly on the cards.
In some respects that's a tough result for investors in fundamentally solid New Zealand companies.
While there are expectations that the local economy will slow in 2008, it is still running at capacity and there is nothing particularly wrong with the outlook for most of our blue-chip stocks. The likes of Fletcher Building and Contact Energy have taken a pounding but will still deliver strong profits. Stocks like Vector and Telecom are trading at such low levels that - in ordinary times - they ought to be good investments based on their dividend yields alone.
But these aren't ordinary times. The fallout from the US sub-prime crisis has sparked a credit crunch, leaving even the biggest and most powerful of the world's banks scrambling for cash.
But to keep things in perspective, long-term investors - who have been in the New Zealand market since at least 2003 - are sitting on huge gains over that period. Between January 1, 2003 and January 1, 2008 the NZX-50 rose 106 per cent. Lop 7.5 per cent off that and you're still sitting pretty.
If we're lucky this correction may be swift and orderly. So far it has been just that.
It will take time for things to settle. There will be rebounds and more falls as US companies report recession-affected earnings in the coming weeks.
Eventually the banks will get their cashflow under control and the market will offer bargains that are too good to ignore.
Business people will keep working and thinking and making money. Normal service will resume and fortune, as always, will favour the bold.