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Why CVS is giving up smoking

Wed, 2014-02-05 12:10

If you’re used to getting your cigarettes from CVS, you should start coming up with a backup plan. The pharmacy convenience store chain says it’s no longer going to sell them after October 1.


CVS is definitely going to lose money on this. $2 billion a year in sales, out of $123 billion total (in 2012).

"In the short run," says Columbia Graduate School of Business professor Rita McGrath, "it's clearly going to be something that their shareholders will have to swallow hard, because it will cost them cash flow."


Cigarettes sales in the U.S. are declining anyway. CVS’ decision is part of a modern business phenomenon of rapid redefinition in order to keep up, says McGrath, who is author of "The End of Competitive Advantage".

"They’re exiting a business that’s got flat growth, or is in modest decline, in order to pull resources out to fund things they see as brighter prospects of the future."

McGrath says it’s much like Verizon ceasing to print phone books, or Hilton Hotels quitting room service. 

"Not that they’re bad lines of business," says McGrath, "but they’re not the future."


"They’re trying to tap into this vast market for providing more comprehensive healthcare solutions," says McGrath.

If this pays off, CVS will make a lot more in the long run than it lost on cigarette sales. 

CVS wants to be somewhere between a pharmacy and a doctor’s office. It wants to become the place you go to get your shots, to get medical advice, to get prescriptions. And if that’s where CVS wants to go, then it really doesn’t look good to be selling cigarettes.


John Palizza is a retired lecturer from the Jones School of Business at Rice University, and worked at Walgreens for 23 years.

"The retail side, the general merchandise side of the pharmacy business is slow growth," he says. "If you look at same store sales on the general merchandise side, it’s a higher margin business, but a slower growth business."

On top of that, online sales have been a source of brutal competition for many retailers.

CVS has, for a number of years says Palizza, been pushing much harder to get more of their dollar revenues from the higher growth health care arena.

"This is another step in that direction."


Ceci Connolly, managing director of consulting firm PwC’s Health Research Institute, says for businesses ranging from pharmacies to communications, "we see enormous opportunity for nontraditional players to deliver more and more healthcare."

The drivers opening up this space for retail healthcare are the oldest in the book: convenience, cost, and technology. 

Already, "more than 10 million Americans get a flu shot today at pharmacies, many other millions get them at grocery stores or big box retail stores," says Connolly.

It’s cheaper and easier than scheduling a doctor’s appointment for something so simple.

"That’s a perfect example of people voting with their feet, and we believe much more of that is coming in the very near future."

Advances in technology – and advances in people’s comfort level with that technology -- allows more to be done outside of a hospital, says Columbia’s McGrath.

"As we get smarter with certain technology, it becomes possible for less skilled providers to do something," she says. "You don’t need a trained super-specialized doctor to say 'Yes you have the cold,' or 'Yes, you have pinkeye." 

What’s more, the industries currently occupying much of the healthcare industry space are damaged.

"We know from our research that insurers and pharmaceutical companies do not rate high on trust or popularity scales, so some of these new players may have an advantage with brand identity," says Connolly. CVS, capitalizing on its corner-store image – and now its anti-smoking cred – is adding capital to its branding bank.


It’s more than a pharmacy industry thing, according to PwC’s Connolly.  

"Right now in our conversations with clients, we see a lot of interest in getting into the healthcare space," she says. "We’ve studied the top Fortune 50 companies, and 76 percent of them say that today they are in some way in the health care business."

This includes communications companies, retailers, sporting goods stores, and "folks you would not think of as being hospital or insurance companies."

These efforts range from offering healthcare services to healthcare gadgets, like those that count your steps or calories burned.

"These are the little initiatives that they can break into healthcare and get a foothold and see if they will expand."

It’s a reflection of the pressure and the opportunity that is facing the pharmacy industry as a whole, and CVS is trying to get out ahead.


"They’re trying to position themselves as a leader for the healthcare side of the retail business," says Palizza. "Whether others follow suit, or say 'we’re happy to pick up the dollar volume that CVS doesn’t want,' is an open question."

Ghostboxes: What's left behind when Target shuts its doors?

Wed, 2014-02-05 12:03

Big-box retailers have hit on hard times lately — Best Buy, Sears, and Kmart have all closed hundreds of stores since 2011. Online competition and a changing suburban landscape are among the challenges, but it turns out shuttering big-boxes has some unanticipated consequences. Eight Target stores are set to close across the country on May 3, which has caused an uproar in one Ohio town.

Since January, residents of the middle-class suburb in Trotwood, Ohio, have been up in arms over Target's announcement  that it will close a store there. On a dreary Saturday morning, protesters stream into the store's parking lot, but they’re not marching or chaining themselves to the doors. It’s a "shop-in." These protesters are rolling out those red Target carts and buying stuff, from crock pots to toothpaste to underwear.

The shop-in was organized by Trotwood residents as a last-ditch effort to show Target they have buying power. But Target shows no signs it will change its plans to close eight stores around the country, including the one here.

"It was like, ‘What? Target?!'" says Trotwood's mayor, Joyce Cameron.  "It was devastating."

Adding insult to injury, Mayor Cameron says Trotwood’s leadership heard about the closure from the newspaper, not from the Target corporation.

One of the biggest problems Trotwood faces is population loss: more than 10 percent of the population has left in the last decade. The poverty rate here has shot up, too, from 6 percent in 1989 to 18 percent in 2011. Now big-boxes are bleeding out of this middle-class suburb, taking jobs and property taxes with them.

"Sears, Penney's, Lazarus, Wal-Mart, Kmart, we’ve slowly, one by one watched them leave," says Trotwood City Council member Bruce Kettelle. "There’s a shift going on and we’re part of that shift. Unfortunately, we have to live with it. But we don’t want to live with it."

As to what exactly that shift is, it depends who you ask. Target wouldn’t give an interview, but it issued a statement saying closures are generally due to a store’s weak long-term financial performance.

Plenty of experts will say closures don’t necessarily signal an overall decline for a chain or an industry.

"Brick and mortar stores, in other words, physical stores, are not going to go away," says Serdar Durmusoglu, a retail expert at the University of Dayton. "There’s movement from one suburb to the other.

"Target in particular is still opening more stores than it’s closing—reorganizing, but not reducing, its big footprint.

What’s going on in Trotwood, though, is more about a trend towards boarded-up big-box stores. There’s even a name for them: "ghostboxes."

Sarah Schindler, a law professor at the University of Maine, has researched the legal implications of ghostboxes for municipalities. She says ghostboxes are expensive to demolish, and it’s difficult to turn these buildings into something else. In her opinion, that points to poor planning decisions.

"I think a lot of communities are coming around to the realization that this sort of big-box, single-use commercial district wasn’t necessarily the best idea," Schindler says.

"Other than just to shutter the doors and get out of town, there really needs to be a better exit strategy," says Mike Lucking, the Trotwood city manager. He says if towns are going to bring in big-box stores, they need to think ahead about what happens when the companies move out.

Lucking remembers when Trotwood was the shiny new shopping destination outside Dayton: "Things really do go full circle."

Without Target and all the other big-boxes that closed, Trotwood won’t be much of a destination at all.

Getting out of his car at last Saturday’s shop-in, Doyle Copeland says it will now be a 20-minute drive to the next discount retailer

"It’s the last thing we got, we need this Target," Copeland says.

Say 'meow' to the newest Monopoly piece

Wed, 2014-02-05 10:26

From the Marketplace Datebook, here’s a look at what’s coming up Thursday:  

  • In Washington, the Commerce Department reports on International Trade for December.
  • Chain stores are slated to report January sales data.
  • And if you’ve acquired the board game Monopoly recently, you may have noticed that the iron token is no longer a game piece. Hasbro announced its replacement by a cat token one year ago. Really, what’s likely to bankrupt you faster? Vet bills or pressed clothes?

Congress holds hearing data breaches at Target, retailers

Wed, 2014-02-05 09:31

Congress has been holding hearings this week on the massive personal data breach at Target and other retailers. Top executives have been answering questions on the hill about how 70 million people had their personal data stolen. Today executives and others are answering questions about data security in front of the House Subcommittee on Commerce, Manufacturing and Trade. New Jersey Congressman Leonard Lance on that committee and we spoke to him before the hearings began this morning.

Click play on the audio player above to hear the whole interview.

India's reaction to Satya Nadella becoming Microsoft CEO

Wed, 2014-02-05 09:11

We've been talking a lot this week about Microsoft's new CEO Satya Nadella. But we haven't heard from anyone in his native country of India. So we asked The BBC's Yogita Lamaye to give us a sense of how people are reacting from Mumbai.

Click play on the audio player above to hear more.

PODCAST: What are 'Climate Hubs?'

Wed, 2014-02-05 07:42

Today President Obama will announce seven of what the administration's calling climate hubs around the country. These hubs will collect data to help farmers, and others, deal with drought, fires, and floods. Marketplace's David Weinberg joined us to help explain how this is going to work.

And, Twitter is announcing its first ever earnings figures later today. But for the social media company, revenue is hardly the only number that matters. Sure, earnings do matter in an earnings report. But people who follow Twitter -- the stock — are going to be looking other places for clues, too.

Spanish government figures out this week show that about 113-thousand Spaniards lost their jobs in January. Spain’s unemployment rate of 26 percent is higher than that of any European Union country except Greece. But the government says the economy is improving and the jobs picture will improve this year. The BBC’s Tom Burridge reports from Madrid that one advantage the country enjoys is a skilled and affordable workforce.

Obama administration to announce climate hubs

Wed, 2014-02-05 06:14

Today President Obama will announce seven of what the administration's calling climate hubs around the country. These hubs will collect data to help farmers, and others, deal with drought, fires, and floods. Marketplace's David Weinberg joined us to help explain how this is going to work.

"So there's not a lot of details yet on how they will work but basically the seven hubs and 3 sub hubs, will collect regional data on climate conditions and use that data to educate farmers and rural communities on how to deal with things like drought and changes in the growing season. The U.S. Department of Agriculture says that droughts alone, from 2011-2013 cost the U.S. $50 billion. And the creation of these hubs is an example of the president's plan to bypass congress on certain issues, something he promised in his State of the Union speech last week."

And how will these hubs use this data to help rural communities?

We could see initiatives like we're seeing now in California which has been especially hard hit by drought. These are things like storm water capture projects or invasive pest control which have a big impact on the ag business. Data could help communities manage their water use and better develop systems for recycling water. The hubs would also study fire seasons which are getting longer and more severe as temperatures rise. And this is a sort of stepping stone to broader climate change legislation that the Obama administration would like to pass.

CVS to stop selling cigarettes and other tobacco by Oct. 1

Wed, 2014-02-05 05:58

In a first for a major drugstore chain, CVS will stop selling cigarettes and other tobacco beginning in October. That will wipe out an estimated $2 billion a year in sales, but CVS believes it can more than make up the difference by expanding services to promote better health.

Troy Brennan, Chief Medical Officer for CVS Caremark, joined us to talk about the company's decision.

"As a health care company, you just can't be selling the number one public health problem," Brennan says.

Click play on the audio player above to hear the whole interview.

Using apps to track cattle in Scotland

Wed, 2014-02-05 05:29

Here's a place you wouldn't expect to find an award-winning app. A cattle farm in Scotland. The application is, yes, for cattle management. It was designed by teenagers as part of a contest put together by an organization called Apps for Good.  

Judith Burns, a producer at the BBC's radio project called School Report, joined us to talk about it. Click play on the audio player above to hear the interview.

What online job listings tell us about the economy

Wed, 2014-02-05 05:16

Years ago, the Conference Board sifted through pages and pages of classified help wanted ads in newspapers.  They switched to online job sites in 2005, but the idea is the same: Scan through help wanted ads to get a picture of the jobs market.

“I’m using it because I’m particularly interested in how difficult it is to fill new job vacancies,”  says Jonathan Rothwell, a labor analyst at Brookings, who has looked at data on math and computer science positions. “Those jobs are now almost as difficult to fill today as they were before the recession.”

But Rothwell says it’s still easy to fill lower-skilled jobs. 

And economist June Shelp, a vice president at the Conference Board who developed the online job index, says she has found picky employers. 

She says they used to hire community college graduates but, “Now they’re asking for somebody who has a graduate degree.”

The Conference Board isn’t the only game in town.  Other private companies, and some states, are also crunching job site data.

Designing battlefield technology to save lives

Wed, 2014-02-05 04:20

Usually when we talk about technology in war, we're talking about technology designed, essentially, to destroy life. But today we're focusing a new technology designed to protect it.

John Steinbaugh is a former special forces medic for the U.S. army. Now he works at a startup in Oregon called RevMedx . It's made up of scientists and veterans trying to solve an evolving set of problems on the battlefield.

"The battlefield is fluid," Steinbaugh says, "Every rotation you go there it's like a new war. So medics are constantly coming back, updating other medics on what has changed on the battlefield, and one of the standard compaints was wound packing."

Specifically, wound packing to try and stop bleeding after someone has been hit with a bullet. Or shrapnel. These kinds of wounds are deep and narrow. So Steinbaugh and others designed a new piece of tech to help. The XSTAT looks kind of like a syringe filled with little Sweet Tart candies. But they're not candies.

"Picture a sponge that you would buy at the store that, when you run it under water, it grows about 15 times its size," says Steinbaugh, "This idea came from taking the same compressed sponge technology and punching them into a bunch of pellets. Throw them all into one syringe, and when they make contact with fluid or blood, they all expand at the same time, creating a tremendous amount of pressure."

That pressure seals wounds in 15 seconds. And the inventors say it's enough to keep someone alive until they reach a hospital. The XSTAT is also designed to be light and be attached easily to body armor. RevMedx has recieved a $5 million grant from the U.S. Army to develop a finished prototype, and they won a grant from the Bill and Melinda Gates Foundation to develop a version to be used to stop postpartum bleeding.

Spain's skilled and affordable workers may turn the tide

Wed, 2014-02-05 04:09

Spanish government figures out this week show that about 113-thousand Spaniards lost their jobs in January. Spain’s unemployment rate of 26 percent is higher than that of any European Union country except Greece. But the government says the economy is improving and the jobs picture will improve this year. The BBC’s Tom Burridge reports from Madrid that one advantage the country enjoys is a skilled and affordable workforce.

Antonio Molina is the CEO of a company called Advanced Medical Projects which tries to cure some of the rare and fatal genetic diseases that affect children. He set it up in 2009 at the height of Spain’s economic crisis. Back then, it wasn’t easy to get funding for a start-up and he had to apply to 69 banks before he got the necessary funds. Molina believes things are getting better and investor confidence is returning. He just secured 21 million Euros – about 28 million dollars – from a French-Swiss venture capital firm. Molina says start-ups based in Spain have an advantage because the scientists are highly-trained and they cost less than in the US or Germany where competition is greater.

Tech company boss Juan Cartagena agrees. He says the current difficult jobs market means that talent is available at a discount rate and there’s not as much competing demand as there would be in countries like the US, where the tech sector is much bigger than Spain’s. Cartagena says many bright people want to work for his firm Traity – a website that collates and analyzes social media activity - because it’s a challenge.

The Spanish government, meanwhile, has challenges of its own. It must make Spain more competitive and cement the economic recovery it says is in place. Professor Xavier Vives, a prominent Spanish economist from the SA Business School, says more investment is needed in innovation, in research and development and in education. He believes Spain can only be successful once it embraces radical structural reforms.

But European elections are taking place in May and few believe there will be reforms before then – or any significant improvement in Spain’s depressing jobs situation.

Irish bankers on trial for financial collapse

Wed, 2014-02-05 03:59

In the US, there's a persistent criticism is that no high-level Wall Street executives went to jail for their role in the 2008 financial collapse. That may not, in the end, be the case in Ireland.

The former chairman and CEO of Anglo Irish Bank, Sean FitzPatrick, and two deputies go on trial today in Dublin for allegedly trying to pump up the bank's share price.  The trial is described as one of the most complex in Ireland's history.  There's intense public interest because the Irish government's fateful decision to bail out banks like Anglo Irish five years ago essentially bankrupted the country.

The BBC's Diamaid Fleming joined us from Dublin to give some perspective. Click play above to hear the interview.

What story will Twitter's first earnings report tell?

Wed, 2014-02-05 03:21

Twitter is announcing its first ever earnings figures later today. But for the social media company, revenue is hardly the only number that matters.

Sure, earnings do matter in an earnings report. But people who follow Twitter -- the stock — are going to be looking other places for clues, too.

Debra Aho Williamson, an analyst at eMarketer, says, "I'm going to be watching for any information about how big their user base is getting."

How many more people are using Twitter is important.

"They do trail behind Facebook by a wide margin," she says, "and there have been some concerns that while they are growing substantially, Twitter is still a hard service to use."

Williamson will be looking for any sign Twitter might try to simplify. Nate Elliott, who follows Twitter for Forrester Research, says, "I'm most looking forward to hearing what the management has to say about their plans for marketing and advertising offerings."

Of course, all these indicators --  how many users, how many ads -- add up to the question investors want an answer to: how much revenue?


Amid Texas drought, this rain man bottles water

Wed, 2014-02-05 03:10

Drive west on U.S. 290* about 20 miles from Austin, Texas, and turn directly into Richard Heinichen’s driveway. A sign overhead reads, “Tank Town: World Headquarters, rainwater stuff.”

From this 10-acre plant in Dripping Springs, Heinichin installs home rainwater-collection systems for his neighbors in the Hill Country, and sells “bottled cloud juice” to cafes and hotels in Austin.  

Collecting rainwatwer may seem like an unorthodox proposal to address the record water shortages that have gripped the drought-gripped state. Heinichin says it's no problem. "You got enough square footage"— on a rooftop—"you got it covered."  

He's got the square footage at Tank Town. Two barns have 20,000 square feet of rooftop that rain can run off of. Instead of downspouts, the gutters run to across-spouts, like aqueducts, to 17 above-ground tanks.

Those tanks hold a quarter-million gallons, and they’re full up, even though Heinichin bottles about 37,000 gallons a year.

That’s not enough to keep up with the rainfall, even in a drought.

"It rained 11 inches on Halloween," he says.  "Over 100,000 gallons went out on the highway out there."   

Heinechin says it’s not just the quantity of rainwater that makes it compelling. It’s the quality.

"I didn’t realize rainwater was so good," he says, "till I drilled a well."

That was in the early 1990s, when he moved to the Texas Hill Country. At first, well water— hard and salty-- was the only option.

"Took a bath in it— I smelled like rotten eggs," he recalls. "Almost threw up in the shower. And you try to go to the shower to get clean!"

His clothes stood up by themselves. His coffee tasted awful.

So he decided to give rainwater a try. As a trained blacksmith, and a tinkerer, Heinichin did the work himself, installing the gutters, the aqueducts, and the first tanks.

He liked the result, but he didn’t think of it as a line of work. That came to him.

"My neighbor comes over and says, 'What’s the deal with your dishes? They’re so clear!'" he says.  "And I say, 'I know!' Because before they were foggy and looked like hell.  And he came over and just noticed it, and says, 'I want— I have to have that, too.'"

That neighbor told others, and a business was born.  "Tank Town just grew by itself," says Heinichin, "Bbcause there was such demand for what I did."

The cost — around $15,000 — is comparable to having a well dug.

"People say, ‘When is this damn thing gonna pay me back?’ And I say, ‘First shower.’"  

Heinichin says he does about 30 home systems a year — and he doesn’t want more customers.

"We weed ‘em out," he says. "If we do their system, then they become a Tank Town citizen — one of our people — and we have to take care of them. And some of these — you don’t want to take care of everybody."

However, to start the bottling business, he did need to do some convincing. Just not to customers.

"Government said, 'You can’t do that, because government’s not approved as a source for water,'" he says. "I say, 'OK, where do you get your water?'  They keep thinking, and I get ‘em up to the highland lakes.  ‘OK, so what fills that?’"

The Texas Commision on Environmental Quality eventually certified Tank Town as an approved public source of water.

*CORRECTION: The original version of this story misidentified the highway leading to Richard Heinichen’s home. It is U.S. 290. The text has been corrected.


When flirting makes you more loyal

Tue, 2014-02-04 17:20

It turns out that flirting makes you more loyal -- at least in a business sense.

A professor at Harvard Business School found that exposure to a new brand actually made the customer more committed to their original favorite brand

For example, the researchers asked people who were die hard Coca-Cola drinkers to name some good qualities of Pepsi, and vice versa.

In both cases, doing so made the customers return more fiercely to their preferred soda pop.

Maybe just don't try this on your spouse.

Satya Nadella and Bill Gates: Microsoft's Batman and Robin?

Tue, 2014-02-04 16:33

Big news out of the world’s biggest software maker today: After a months-long search, Microsoft has officially hired insider Satya Nadella as its new CEO. The 22-year company veteran is its third chief executive.

Our own Ben Johnson of the Marketplace Tech Report has been following the story. He says the announcement isn’t a big surprise – Nadella had worked on Bing and Azure, Microsoft’s successful cloud computing platform.

The question now: What’s next for Microsoft?

Johnson says:

"They’re moving a lot of [their] software onto the cloud -- basically, [making] a way for us to access these kinds of powerful tools, either as a business or as a single consumer, via the internet. Now, there’s another side of this – there’s Xbox, there’s the  Microsoft surface, which not very many people I know have. And then there’s the Windows phone, which is a product of Nokia now, and a space for Microsoft to grow in the hardware area. My guess is that Satya Nadella is going to work on the former more than the latter… what [he] is going to be focused on is big data and innovation in this area of cloud computing."


The other interesting nugget to come out of the CEO announcement is that Bill Gates, the founder of the company, will be leaving his position as chairman and will be something of a special tech adviser to Nadella:

"It is a little bit confusing and a little bit weird that Bill Gates is still around. I think what this tag-team, Bill Gates-Satya Nadella, Batman-and-Robin thing might be about is Bill Gates is sort of getting back involved in the company. He’s going to be working at the company three days a week, instead of dealing with investors. And he’s going be a sort of support to Satya Nadella. He’s going to be the reminder that the person who built this company is still involved in the day to day."

Nadella's got some "I built this" cred of his own, however – his cloud computing department at Microsoft is now is a $19 billion business. 

Sneakers on the runway

Tue, 2014-02-04 14:03

With the highly anticipated New York Fashion Week just around the corner, most people are probably thinking of extremely tall supermodels in high stilettos and expensive brands.

This season, however, don’t be surprised if you see gym wear on the runways.

"Chanel couture and Dior couture, probably the two most established French fashion houses  showed sneakers that were obviously very high end," says Kate Betts, author of Everyday Icon: Michelle Obama and the Power of Style, and a former fashion editor.

Betts says that consumers are looking to dress to match their lifestyle.

"It’s the wellness look. I think they want to be active and healthy, even if they’re not active and healthy, they want to look like they are," says Betts.

She believes this new trend has plenty of room for development and predicts there will be more collaborations between active and high fashion labels. 

Microsoft's great debate

Tue, 2014-02-04 10:47

With 22 years under his belt, Satya Nadella is the consummate Microsoft insider. But don’t think that experience made him a shoo-in for the top job.  

One reason Microsoft went nearly six months without a CEO was because executives spent time looking for their new one outside the company. Microsoft is a case study of what so many aging technology companies -- from Intel to Hewlett Packard -- are going through.

The old line businesses still bring in a ton of cash but they’re slow to innovate, said Michael Cusumano, a professor at MIT.  Often times, he says, companies like Microsoft consider bringing in an outsider to provide that spark.

"I think they juggled all these balls in the air and concluded that it would be too difficult for an outsider to come," said Cusumano. "You really need someone that understands the culture and people to really get the  most out of the organization."

Cusumano said that Microsoft seems to have found somebody who can keep the company pumping money, and hopefully, turn it in the right direction.

Bob Sutton, the author of "Scaling Up Excellence", thinks picking an insider was the right decision.

"Although there’s the mystery and the allure of having the outsider ride in on the white horse," said Sutton. "There’s actually a large body of academic research that shows when outsiders come in, they do worse."

Sutton pointed to a study that showed former GE C.E.O.’s who went on to head-up other companies did consistently worse than insiders. And that trend holds across industries.

Sutton said the problem is that outsiders often think there’s a silver bullet. That is, if they lay-off departments and issue mandates, a turnaround is sure to happen. But he said, that approach ignores the human factor.  

"Every organization has its own quirks and history and culture," Sutton said. "And it turns out it takes a very long time to learn where, if you will, the bodies are buried and where the good things are."

But insiders can be tainted by company culture, said Harlan Platt, who teaches turnarounds at Northeastern University.

"I got into the business of turnarounds by asking this silly question, ‘How do you find a good manager at a bad company?’" Platt said.

Platt said Microsoft’s poor culture of innovation suggests that a company man might not be the best bet.

What exactly is a market correction?

Tue, 2014-02-04 10:47

All told, 2014 hasn’t been the rosiest year on Wall Street so far. The markets are up a bit today after a dismal yesterday, but the Dow Jones Industrial Average is about 1,000 points lower than it was at the beginning of the year, and the S&P 500 is off about 75 points.

So: We’ve been hearing a lot lately about how a market correction is coming. Should we be bracing for the fall?

Historically speaking, yes.

Technically, a correction is a change of 10 percent or more, so the Dow would need to lose around 650 more points and the S&P 500 would need to drop by another 100.

"The S&p 500 has averaged a correction, that is a drop of 10 percent of more, every 18 months and currently we haven’t had one since 2011, so we’re about 28 months overdue," says Alec Young, Global Equity Strategist at S&P Capital IQ.

Plus, many key economic indicators like manufacturing and unemployment indicate stocks should be a little lower says Bill Stone, Chief Investment Strategist at PNC Wealth Management. "We will get a 10 percent pullback sometime. Whether this is it or not is hard to say, but you ought to a be ready for it."

Still, we’re probably not talking about a crash, because companies’ profits are pretty much in line with current stock values.

"The best measures of long run stock market fundamentals, the price to earnings ratio, is not in bubble territory," says economist Heidi Shierholz, with the Economic Policy Institute in Washington DC.

But those profits don’t necessarily mean a strong economy. In fact, says Shierholz, a lot of Wall Street’s success has come at the expense of main street’s economy.

"The very weak labor market actually strongly reduces wage growth, and is one of the reasons corporate profits are doing so well right now."

As for investors, PNC’s Stone says they should try to sit tight.

"That is, unfortunately, I guess the price of owning what has long term been the best performing asset class... you probably need Maalox along the way."

Not the extra-strength Maalox we needed in 2008, though. Most economists expect the market will end 2014 a little higher than where it started.

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