Markets are generally considered to be in correction after a 10 per cent fall. After a 20 per cent fall they are described as a bear market.
We haven't seen the dramatic falls that have historically plagued this time of year - the crashes of 1929, 1987 and 2008 all occurred in September and October.
But after one of the longest bull runs on record - which saw the NZX-50 gain 160 per cent between October 2008 and this September - many professional investors have been expecting some form of correction.
Equity market investors globally are feeling wary of a flight back towards bonds and cash as US interest rates start to rise.
New Zealand in particular has been viewed as a high yielding safe haven with a number of low-risk infrastructure stocks like Auckland International Airport and the power companies.
Foreign money has poured in. Nearly 50 per cent of the free-float of the New Zealand market is now owned by foreign investors compared with as little as 25 per cent four years ago.
That's making the NZX even more vulnerable to falls as foreign investors re-weight their portfolios.
On the plus side we still have strong economic conditions and a stable political environment that should provide good support for the market - hopefully mitigating and slowing the pace of any further falls.
As in the US, where stocks have also been under pressure as expectations of interest rate rises grow, the best antidote will come from stronger corporate earnings on the back of a stronger economy.
Having the value of stock markets more closely aligned to earnings will ultimately be a good thing for the global economy.
The problem is in how smoothly markets are able to make the transition.
Further market panic in December is a risk when the US Federal Reserve finally makes it move - even though it has been well signalled.
But beyond that the certainty of a steady shift to higher rates is also far from certain.
On Friday San Francisco Federal Reserve president John Williams said he'd support the interest-rate increase in December and a few more next year.
The Fed allows its members a great deal of freedom to speculate - and that speculation should be taken with a grain of salt.
This time last year Fed members were talking about four rate hikes in 2016.
We've seen numerous false starts for the US economy and every step the Fed takes on the way back to more normal interest rates is likely to involve plenty of angst and dithering.
There's plenty of room, even within the broader tightening cycle, for markets like the NZX to recover. It is by no means a sure bet that we won't see the NZX-50 rising again at some point.
