Er. Ah. Ladies and gentlemen. This is your captain speaking. We've encountered, er, ah, a little turbulence. I would ask all of you to take your seats, fasten your belts and keep your eye on the air sickness bag in front of you.
Above all, don't jump out. We're at 20,000 feet.
Let's face it, market-watchers; we're flying through some heavy weather. There's no way to deny it. And it might get choppier before it gets better, or get better and then get worse.
In fact, you can probably count on it.
(As if I needed proof of my turbulence theory, the Dow Jones industrial average was down 8 points early this afternoon, after being up as much as 108 points this morning).
The Dow has corrected itself by about 12 percent off its highs. Some analysts today were forecasting another 5 to 10 percent drop before it hits bottom. I think you can count on that, too.
But I suspect you can also count on a safe landing. I just can't give you a time of arrival and neither can anybody else. But you'll get there.
So much for the flying analogy. I do remember Peter Lynch telling me some time ago that people shouldn't be in the market unless they have the stomach for it. Now I know what he meant.
But here's some perspective.
First: If, in fact, stock prices were overvalued and unsustainable, we should be grateful that we're being let down in relatively mild bursts, rather than all at once. At some point, when valuations are where people think they ought to be, the ride will be much smoother.
Indeed, one of the reasons the market reacted so strongly to the lower than expected earnings of Intel last week (which is what started the decline, you may remember), is the general consensus that stocks, especially the top 50 or so, are too expensive, and the knowledge that everyone else thinks they're too expensive as well -- which puts the entire institutional sector on high alert for a rush to the exit.
So, it's in everyone's long-term interest that the sexiest stocks give up some of their sex appeal in the interest of the market as a whole -- which is what appears to be happening.
An analysis this morning by Legg Mason's chief market strategist, Richard E. Cripps, showed that the top 50 stocks of the S&P 500 are trading at roughly 30 times their expected Year 2000 earnings per share, whereas the rest of the 500 are trading at a multiple of 18.
That's an extreme gap which needs to be closed, at least a little.
Second: The stock market is not the economy. However, because so much of the economy appears to be dependent on it (the "wealth effect," the use of stock portfolios, essentially as collateral for loans), the health of equities is beginning to be mistaken for the health of the economy in general -- a horrendous development upon which Fed Chairman Alan Greenspan commented last week as well, contributing to the market's fall.
A general change of altitude in the market, therefore, could help prevent real trouble in the economy at large.
Of course, it's hard to look at your shrunken 401(k) at the next report, or your portfolio of stocks as they sink, and listen to someone like me saying this is good for you.
But it is. Get out those air sickness bags and enjoy it.
Fred Barbash is The Washington Post's business editor. He writes a weekly column that appears Sundays in The Post's Business section.