I would think the one thing that could cause the greatest decline in the market is not China but more pain in the energy markets. More pain would be greater than expected bankruptcies and then a rout in the junk market. As much as we have heard about falling junk bond prices recently, they are still outperforming stocks YTD. Of course, energy is also what could lead the market back to new highs- namely an unexpected rebound. Then again, maybe there is something lurking out there we don't yet see that could lead to a further 15% to 20% or more market decline.

I did something. I took the opportunity to buy some mutual funds to capture the end of Friday's close. I bought a couple domestic micro cap funds (I figured if China's economy contributed to the market decline, it might be better to go smaller cap, since those companies are less likely to export and might be less influenced by a Chinese or global recession…plus I have been wanting to get into micro caps so it seemed like a good time to do it). I also bought a small amount of the S&P 500 index fund in my 401K. Yes, the market could go down more, but if you are ever going to buy, buy as the market goes down as it did to get a cheaper price, just don't swing for the fences. I keep lot in my stable value fund to take advantage of dips, so if the market continues to go down, I will buy a little more. I have about a 15 year time horizon. The only potential concern for my overall portfolio is that I am likely overweight in tech and healthcare.

The N Y Times has a few good columns today on the stock and bond markets. As for bonds, there's a front-page article reporting that mutual funds are engaging in a selling spree of emerging-market bonds, and this is contributing to a sharp decline in global markets. They are selling for good reason: their investors are withdrawing money from these funds. Last week alone, investors withdrew $2.5 billion from emerging-market bond funds.
http://www.nytimes.com/2015/08/23/business/investors-race-to-escape-risk-in-once-booming-emerging-market-bonds.html?_r=0
And Gretchen Morgenson writes a column in which she questions the vague disclosures made by highflying mutual funds. She warns that these funds put investors in peril.
http://www.nytimes.com/2015/08/23/business/vague-disclosures-by-highflying-mutual-funds-may-put-investors-in-peril.html
If the waters are receding (a new bear market?), then we may soon discover which fund managers have been swimming without clothes.
[Confession: I really don’t know what’s in my bond funds. I’m trusting the managers to be prudent. I hope I’m trusting the right fund families.]

Personally, I'm very concerned.
I'm buying, but I don't think I'm buying in the traditional "buy the dip" mentality. I'm buying because I think something is a tremendous value (BPY, which I'll just keep continuing to buy - it's an MLP w/K-1 and not something I'm recommending because it's not conservative, but I think it's absurdly cheap), I'm buying because I really like a company a great deal and think of it as a decades-long holding and don't want to time it (Ecolab, Canadian National Railway, V/MA, others.) I'm buying because I think the market was already mis-understanding the fundamentals and is now indiscriminately selling the sector/panicking on top of it (Gilead). I'm buying because there's an element of me that's concerned that talk of rate rises turns to talk of "next-level" monetary policy easing when things turn South.
Am I buying because I think things are going to be a-okay? No. If anything, I'm certain that this period in the markets ends badly - it's not a question of if, it's a question of when and how - it's particularly the how that interests me as I think things may look very different than past crises and I'm not sure that owning cash and bonds will be the way to go again.

FYI: Stocks slumped worldwide this week, with U.S. and European markets off more than 5% and the Shanghai Composite Index losing more than 11%. Oil prices also skidded, dropping more than 6%. Traders feared that slowing growth in China, the devaluation of the Chinese currency and the overhang of too much debt could stifle global economic recovery. Here are five things you should know about how not to react.
Regards,
Ted
http://blogs.wsj.com/briefly/2015/08/21/5-things-investors-shouldnt-do-now/

http://www.marketwatch.com/story/dow-5000-yes-it-could-happen-2015-08-21?siteid=bigcharts&dist=bigcharts
Will probably see a lot of these warnings as the Cassandras come out in force after this week's carnage. Sure would have liked to have seen more fear here this week instead of buying the dips and averaging down on losers as the market kept cascading downward.

Peter Lynch recommended a 100% approach in one of his books. He claimed he had his analysts calculate what would happen if a retired person placed all assets in the market and concluded that a 7% withdrawal rate would work even if the market crashed during that person's retirement. I wonder if Lunch still believes that.

Up today and up for the week and way ahead of its category which was a loser. Never been more frustrated since I am unable to purchase it here in KY. Then again am even more frustrated in that I have a small position in another bank loan fund I would have exited last week. I NEVER hold onto a losing position. But unbeknownst to me they added a 1% short term redemption fee. When I purchased it I was under the impression it still was redemption free. Luckily for me I still came out ahead for the week as I hold more in MMIIX, a junk muni fund.
Unrelated, still don't see much fear here. Imagine a sharp rally is in store but until the junk corporate market stabilizes don't see much of an everlasting one.

My best fund today, other than cash, was DODIX - which didn't gain or lose.
From the watch-list: MFLDX, HSGFX and BEARX all had nice gains.
Approximately +1%. +2% and +2% respectively.

Pimco Managed Futures Fund up, as was the AQR Managed Futures fund.

My best fund today, other than cash, was DODIX - which didn't gain or lose. I'm spread-out pretty good. So, that's what I'd call a rotten day.
From my watch-list: MFLDX, HSGFX and BEARX all had nice gains.
Approximately +1% +2% and +2% respectively.
Interestingly, both gold funds I track were down a bit, despite the metal gaining.

A sort of interesting technical tidbit: 1970 has been cited I dunno how many times (e.g., here, months ago) as a key support level for the S&P, and it closed there, on the nose, today.

Here is my question to the above products. Does the cost of purchase always stay the same; with inflation taken into consideration. In other words if the market takes one (heck) of a beating, will it cost less after the beating? Derf

Maybe, but if so, not by much.
When you annuitize most annuities (fixed annuities, immediate annuities, deferred income annuities, etc.), you get a promised fixed stream of payments. Those streams come out of the insurance company's general account (i.e. they're just unsecured liabilities of the insurer). So to guess at how much effect the market has on annuity prices it would make sense to look at where the insurance companies invest their assets.
According to the Chicago Federal Reserve, on average insurance companies invest only 2.3% of their assets in equities. So whatever impact the equity market has is going to be miniscule. On the other hand, since 3/4 of their portfolio is in bonds (with another 10% in mortgages), the credit market should have a much bigger impact on pricing.
I've read several people suggest that even the credit market won't have much of an impact on purchase costs. That's because with annuity payments deferred for decades, most of the money for the checks is coming from other policies where the owners didn't collect (died), and not directly from insurance company investments.
Inflation is in a sense a non-factor. To the extent that inflation is reflected in the credit markets, and that the credit markets affect the cost of a policy, inflation will affect costs. But otherwise, it doesn't affect things. Basically, if you pay $100K for $X/month, that's going to be the nominal price regardless of inflation. (The problem is that the first $X check could be worth somewhat less if inflation is low, or a lot less if inflation is high between now and the time you get that first check.)
What does have the potential to significantly affect prices is longevity. If people start living longer, insurance companies will be more likely to pay out, and pay out longer. So costs will go up. On the other hand, if life expectancies drop, so will the cost of these policies.

It's a'gonna happen... just don't know when.

Seems like that just happened today, according to links which Ted provided. We are now officially down >10% from the May highs.
I have my shopping list handy, so we shall see what the mood of the market is next week.

Hi @TSP_Transfer
The U.S. 10 year continues the yield towards 2%. Will close around 2.05% today.

Macro View
Pressure Mounts on China to Act
August 21, 2015 By Scott Minerd, Chairman of Investments and Global CIO Guggenheim Partners,
As a result, the PBoC will soon be forced to reduce bank reserve requirements while allowing for a more rapid devaluation of the RMB. Time is not on the side of Chinese policymakers. Given the severity of the current domestic slowdown, pressure is mounting for more radical policy action.
Expect to see further downward pressure on commodity prices, global equities, and U.S. Treasury yields. The first sign that we are approaching a bottom for all three will be when China caves and allows the RMB to adjust to a more appropriate level, which could mean another 25–30 percent decline in the value of the RMB against the U.S. dollar.

Things will get worse before they get better, and investors around the world are demonstrating appropriate concern. Unfortunately, relief is nowhere in sight.
http://www.guggenheimpartners.com/perspectives/macroview/pressure-mounts-on-china-to-act

Not sure if the below was linked but answers a lot of questions on the three firms that offers QLACs through Fidelity and more. I also like the annuity calculator below. Looks like maximum age is 82 to purchase one. Personally, would take benefits beginning at 80 and not 85. I hike with some hearty 80 year olds, but not so above 85. For me one of the allures of the $125,000 is it is that much less against my nest egg that is subject to RMD. Also, instead of simply living off my principal till death do I part it gives me an income flow beginning at 80 other than SS. I guess I could also go the individual corporate bond route for income (instead of simply living off my nest egg principal) if I ever decided to 100% abstain from trading. Albeit psychologically can't see that happening.
https://www.fidelity.com/annuities/deferred-fixed-income-annuities/compare
https://www.immediateannuities.com/

One Article linked here states the following:
"The cumulative dollar amount invested into ALL QLACs across all retirement accounts may NOT exceed the LESSER of $125,000 (original regulations were only $100,000), or the aforementioned 25% threshold."
Can I assume that when doing this calculation that I combine all retirement accounts (tax deferred as well as tax free), not just the IRA accounts impacted by RMD?

I think the wording wasn't great. Short answer, no (or better stated, I don't think so).
There are two separate limits; you have to satisfy both of them:

• $125K total QLAC purchases inside your TIRAs, 401(k)s, 403(b)s, etc.
• 25% of each 401(k) balance (for a QLAC within that 401(k)), and 25% of combined TIRA balances (for QLACs in one or more of the TIRAs).

http://www.cpapracticeadvisor.com/news/11651859/irs-issues-new-regs-for-longevity-annuities-exempt-from-rmd-rules
" Specifically, the amount of the premiums paid for the contract under an IRA may not exceed an amount equal to 25 percent of the sum of the account balances ... of the IRAs (other than Roth IRAs) that an individual holds as the IRA owner."
http://www.irs.gov/irb/2014-30_IRB/ar07.html
So you're not allowed to count your 401(k) or Roth IRA balance in computing how much you're allowed to buy within an IRA. That's limited strictly to 25% of the TIRA balances.
It gets even more complicated if you've already purchased a QLAC. Those premiums count toward the $125K max (and toward the 25%). The value of the QLAC also counts towards the value of your IRA (increasing the denominator for the 25% calculation).

With regard to using Roth IRA dollars for longevity risk Julian commented at the end the kitces article with this:
"I agree with you that there are better hedges for old age than longevity annuities. In a Roth IRA or non-retirement account, one option is to purchase U.S. Treasury STRIPS that mature at perhaps 80 or 85 years of age and at maturity time, buy an immediate life annuity with the proceeds. This has several advantages over a longevity annuity purchased years or even decades in advance: (1) the bonds can be cashed out prior to maturity and may be worth considerably more than their cost if held for many years, (2) the counter party risk (i.e., of an insurance company going insolvent) is eliminated, (3) not all -- or any -- of the maturing bond proceeds have to be committed to the immediate annuity, and (4) if one spouse dies -- or has significantly impaired health -- prior to purchase of the immediate annuity, the immediate annuity can be written for larger annual payouts than would be possible with a longevity annuity (e.g., written as a single life annuity or an impaired life annuity). By my calculations, if I purchase the STRIPS around age 60, then after about age 80-85, the IRR with this method is about 50 bp less than with a longevity annuity. However, this seems like a small price to pay for the advantages and flexibility outlined above."

Maximum purchase age - haven't found an absolute upper limit (beyond the obvious that it can't be above 85, since payments must begin by then). But I did find a commercial QLAC offering that allows purchases up to age 83. So it appears my thinking (that the max would be somewhere between 83 and 84) is sound.
American Pathway Deferred Income Annuity Qualified Longevity Annuity Contract FAQ:
https://estationsecure.americangeneral.com/SharedFilePile/CommonFiles/Annuities/AmericanPathwaySolutionsMYG/AGLC108007_FAQ_QLAC.pdf

I own XLE and it's getting killed. I bought it a few months ago in my IRA.

Sorry, I know how it goes. I bailed on COP in the upper $50's after buying it higher. I'm not getting into oil names, but as I noted in the other thread, I'd consider some "related" names/industries. My stuff is doing mostly lousy today. I think oil could go lower and get to the point where you get real distress.
The pure plays (COP) will likely rebound more than the integrated names, but again, what's the reason for oil to rally and if it does rally due to monetary policy or something like that, look at where we are - we're near where oil was before QE1.