Another great example of irrational behavior of investors. They have no clue about stock markets dynamic. And media, relaying the general feeling, only make it worse. Stock market investment works under the assumption that the market is close to perfect, i.e. information is fully available, everyone gets the information at the same time, and everyone can assess the impact of this information on the value of the companies.

Pan, the Greek god whom the word panic comes from

My modest experience with stock markets tells me that stock markets are quite imperfect. The stock markets (NYSE, NASDAQ, ...) took a beating in the last days. Some fuzzy concerns about the credit market threw the whole market into turmoil. Why? Let me explain what I think. And it has very little to do with finance. A few key so-called experts warn about potential problems. These news are relayed and amplified by hundreds of so-called experts and media, giving the impression that disaster is imminent. Most investors base their behavior on news such as these. They don't do their due diligence of digging the source of the news, examining which stocks of their portfolio might be impacted (most news are industry or country-specific), and don't even bother reading annual reports of companies they invest in to check key ratios and strategy. In other words, they fly blind.

In essence, the news about a concern becomes the cause of the meltdown. Then the "experts" are very satisfied to have been able to "forecast" the dive [ironic].
I believe that investing is better served by understanding the psychology behind herd behavior of dumb investors than by any financial analysis.