Will the Market's Roof Cave In?

This drop feels catastrophic, but the long overdue pullback will soon present a good buying opportunity

It could have been worse. Back on Feb. 27, the S&P 500 dropped 3.5%. On July 26, it only fell 2.3%, but still—it felt pretty bad. Yet as market reactions to repeated events (subprime worries, Shanghai slumps, oil price shocks) become more and more muted, anecdotal evidence indicates that investors' personal reactions to these fear-inducing events appear to be just as strong. So much for getting desensitized to increased volatility. Maybe it's because of the breadth of the declines.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.