Mr. Jones, chief investment officer at investment advisory firm Gratus Capital in Atlanta, is currently in similar talks. Two clients, both retired, asked him this month to move their portfolios entirely to cash. Mr. Jones persuaded them to stay the course and said that the best way for investors to achieve their goals is to still be in the market when it eventually recovers.
“These people were not in a good place,” said Mr. Jones, 43. “They were very worried about goals and dreams and being able to live their lifestyles.”
Equities, bonds and other assets will be clubbed this year as investors wrestle again with the possibility that the US is heading for recession. On Friday, the Dow Jones Industrial Average recorded its eighth straight week of declines, its longest suite since 1932. The S&P 500 flirted with bear market territory.
Families are watching the investments they intended for down payments or college tuition or retirement decrease, day after day. They have seen major retailers such as Walmart and Target note their steepest stock declines in decades this week, after gains signaled an end to the pandemic spending boom.
The turmoil in the market has scared company executives from taking their companies public. In Silicon Valley, dreams of multibillion-dollar valuations have been replaced by reality with layoffs and backward investors.
Stock prices have been hit by forces that appear in almost every cycle, such as rising interest rates and declining growth. There are also idiosyncratic ones, including the rapid decline in inflation after decades of low ebb, a faltering Chinese economy and a war in Ukraine that have shocked commodity markets.
The Federal Reserve has raised interest rates twice this year and plans to continue to do so to curb inflation, but this is causing investors to worry that it will slow down the economy too quickly or too much.
For investors, it may feel like there is no safe place. While the vast majority of individual investors hold on, this is partly because common alternatives do not offer much relief. Bonds, normally a haven when stocks fall, have also been hit. The cryptocurrency market, set as a counterweight to traditional equities, is declining.
For Michael Hwang, a 23-year-old accountant in San Francisco, the fall of the market means he can stop borrowing to get an MBA. He has hoped to be able to pay for his education out of pocket when he eventually returns to school.
For Arthur McCaffrey, an 80-year-old retired researcher from Boston, it means wondering if he will live to see his investments recover.
Rick Rieder, head of interest income at the giant asset manager BlackRock Inc., likened the situation in the financial markets to a Category 5 hurricane. The veteran bond trader has been in the business for three decades and said the rapid price fluctuations are unlike anything he has seen.
“My stomach growls all day,” he said. “There are so many cross-currents of uncertainty, and we will not end any of them in weeks, if not months.”
Investors are used to the Fed stepping in to calm the markets, but many of the dynamics rattling with stocks, bonds, currencies and commodities are beyond the control of the central bank, Rieder said. natural gas in Europe. They can not build up a sufficient stock of housing. “
The step is a complete reversal from the rise in equities in 2020 and 2021. Since then, unusually low interest rates and a rising money supply – by-products of the government’s efforts to stave off a decline – drove the stock indices to repeated new highs. Some investors say that the downturn was long-awaited and that now that it has arrived it can be difficult to repair.
Melissa Firestone, a 44-year-old economist who specializes in the energy market, sold many of her individual shares and bought a fund that shortens the S&P 500 and invested in a fall. “The Fed is going too far, inflation is a nightmare and the real estate market will crash,” she said.
Keith Yocum, a 70-year-old novelist and retired publisher, moved one-third of his savings to money market funds last year. Mr. Yocum does not love having so much money in cash, especially when inflation erodes its value, but sees few better options.
In October, when stock prices were still breaking records, Craig Bartels moved most of his 401 (k) savings and individual pension accounts to money market funds. He soon sold his cryptocurrency holdings and began shorting house building shares and Tesla Inc. through a brokerage account.
A 46-year-old real estate agent in Zionsville, Ind., Mr. Bartels, had looked to the distant past for advice and read Ray Dalio’s latest book on economic history and Adrian Goldsworthy’s “How Rome Fell: Death of a Superpower.”
“This sounds like us right now,” he thought.
His 20-year-old son, a college student, had told him he was trading a few thousand dollars through a Robinhood account. To Mr Bartels, it looked like another sign of a coming bill.
A generation earlier, he himself was a day-trading college student. He did well, he said, but knew many who “threw money at Internet stocks and had no idea what they were doing.” The dot-com bubble of the late 1990s soon appeared. Today, Mr. Bartels happy that he changed course when he did. “I do not think we are near the bottom,” he said.
Don McLeod, a former head of research at a law firm in Manhattan, retired four years ago when markets were strong. He happily checked his 401 (k) account almost every day.
When the shares began to turn in January, he continued to check daily for fear, until the losses became too steep. By the beginning of May, his pension accounts had fallen by 25% in five months.
Mr McLeod hopes the United States is not heading for a repeat of “stagflation” in the 1970s. “When you invest in the money saved during your lifetime to carry you through and it starts to disappear, you feel helpless,” he said. “I do not want to go back to work at 66.”
Susan Wagner, a recent retiree who moved from Chicago to New Mexico’s Rio Rancho with her wife in 2020, withdrew her retirement money entirely from the markets this month.
“The anxiety meant that I literally lost sleep, writhed at night and wondered how much more we would lose,” Wagner said. Her wife, a former radiologist, was hesitant but eventually agreed. “It was too nervous, and I was quite emotional about it,” said Ms Wagner. “I was very upset about what was happening.”
Jim Cahn, chief investment officer for the Wealth Enhancement Group in Minneapolis, said his clients are more nervous now than in 2008, the year of the financial crisis. The question he gets: “Where can I turn to stop getting poorer?”
The company held webinars for customers during the darkest days of the market last year, and warned against uploading on technical stocks and high-flying pandemic names like Peloton, said Mr. Cahn. Recently, webinars have had another theme: Do not panic.
The company is looking at commodities, which tend to protect against inflation and getting a boost from the war in Ukraine, and municipal bonds, which Mr. Cahn said it’s starting to look attractive.
Technology stocks that have soared in recent years, such as Facebook parent Meta Platforms Inc. and Netflix Inc., have been hit particularly hard. Terrifying results or darker prospects have cratered technical stocks and, in painful moments, helped drag down the broader market.
There have been so many bad days that they have started to blur out together, says Sonu Kalra, portfolio manager for Fidelity Investments Blue Chip Growth Fund.
Mr. Kalra was sitting in his home office in the suburbs of Boston in early February when Meta shocked Wall Street with disappointment. When he saw its shares fall in trading after hours, he felt angry with himself for not listening to previous warning signs.
“You feel a lot of pain and start asking, ‘What could I have done differently?’ ” he said. “But you can not cry over spilled milk. You have to move forward.”
At the time, he thought that Meta’s issues were peculiar and not a sign of a broad withdrawal from growth stocks. It came later, when Russia’s invasion of Ukraine sent energy prices higher. “Oil permeates everything,” he said.
On Wednesday, Cole Smead, a portfolio manager at Smead Capital Management Inc., woke up early in Phoenix. Target, whose share makes up about 5% of the Smead Value Fund, was set to report revenue. The target share fell in double digits in pre-market trading. Mr Smead put on a suit and went into his office.
That morning, Target hovered at 25% during Tuesday’s closing. Mr. Smead decided that it was not productive to stare at a screen and look at his fifth largest position in free fall. He picked up a book, the biography of George Hearst, the father of the silver miner William William Dololph Hearst.
“I thought he would probably teach me more than the markets would teach me that day,” he said.
Conventional investment wisdom says that stock markets rise over time. Countless investors saw their savings grow by staying in a market that rose sharply in the decade after the financial crisis. Those who held tight when the market crashed in early 2020 were rewarded when stocks resumed their upward climb within weeks.
For some market participants, this year’s decline feels different. The government’s extraordinary stimulus measures, which have driven the economy into a V-shaped recovery by 2020, have largely come to an end, replaced by policies aimed at controlling inflation. Although the debate over whether a recession is on the way is far from settled, there is broad agreement that the United States has entered a period of slower growth.
Mr. McCaffrey, the 80-year-old retired researcher, has been buying Apple shares in recent weeks and automating the purchases for when the price is below a certain level. But on the whole, it has been a gloomy experience to see shares in his favored technology company erode. Apple has fallen 23% so far this year.
“It’s getting worse for people in my age group,” McCaffrey said, “simply because we do not have time to wait for it to come back.”
It takes a lot to shake up Kevin Landis, a fund manager whose technology-focused fund was hit by the technology wreck in the early 2000s. But when Netflix announced disappointing quarterly results in April, Landis, who was sitting in his home office overlooking his quiet suburb of San Jose, felt as if he had been hit by an earthquake.
Landis had cause for concern: Roku, another streaming company, made up 14% of his technology fund at the end of March. He says he has not sold any shares, although Rokus’ share has fallen by almost 60% this year.
“Probably the crucial difference this time is the last time I could just storm out of the office and go home,” he said. “This time I work from home. So it can not be avoided.”
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