“Most Americans dont benefit directly from a strong stock market, so they arent like to be affected by a major correction. “
I think most Americans will be affected- in 2008, many list money in their retirement accounts, like 401ks. Individual companies losing market value will lay people off, cut benefits, etc. Pensions that are in the market can be cut if losses continue. In 2008, quite a few if us were impacted.
If you invested $1,000 in an S&P 500 index fund at the end of 2004, it would have been worth about $745 at the end of 2008. But you only would have lost $255 on the investment if you actually sold your shares at the end of 2008. If you left your money invested, you would have recovered back to your initial $1,000 investment sometime in 2010 ... and by the end of 2014 your $1,000 investment would have been worth almost $1,700.
And even after the massive sell-off over the last week, your investment would still be worth more than $1,900 right NOW.