Mr. Jones, chief investment officer at investment advisory firm Gratus Capital in Atlanta, now finds himself fielding similar calls. Two clients, both retired, this month asked him to shift his portfolio entirely to cash. Mr Jones persuaded him to stay in this direction, saying that the best way for investors to achieve their goals is to stay still in the market when it eventually rebounds.
“Those guys weren’t in a good place. They had a lot of worry about goals and dreams and being able to live their lifestyle,” said Mr. Jones, 43.
Stocks, bonds and other assets are being hit this year as investors battle the possibility that the US is heading for a recession. On Friday, the Dow Jones Industrial Average recorded its eighth straight week of decline, its longest such streak since 1932. The S&P 500 flirted with bear-market territory.
Families are looking at investments made for a down payment or college tuition or retirement shrink day by day. He has seen big retailers like Walmart and Target report their biggest stock declines in decades this week, signaling an end to the post-pandemic spending boom in earnings.
The turmoil in the market has scared corporate leaders from taking their companies public. In Silicon Valley, dreams of multibillion-dollar valuations have been replaced by the reality of layoffs and retreating investors.
Stock prices have been hurt by forces that appear almost every cycle, such as rising interest rates and slowing growth. There are also some oddities, including a rapid return of inflation to low volatility after decades, a faltering Chinese economy and a war in Ukraine that has rattled commodity markets.
The Federal Reserve has raised interest rates twice this year and plans to do so to curb inflation, but it worries investors that it will slow the economy too fast or too slow.
For investors, it can feel like there is no safe place. While most individual investors are stagnant, this is partly because customary options do not offer much relief. Bonds, usually a haven when stocks are falling, have also dropped. The cryptocurrency market is sinking against traditional equities.
For Michael Hwang, a 23-year-old auditor in San Francisco, the market’s downturn meant he could stop taking out loans to get an MBA.
For Arthur McCaffrey, an 80-year-old retired research scientist from Boston, this means whether he will live to see his investments recover.
Rick Ridder, head of fixed income at giant asset manager BlackRock Inc., compared the state of the financial markets to a Category 5 storm. The veteran bond trader has been in business for over three decades and said the rapid price fluctuations are unlike anything he has ever seen.
“My stomach has been churning all day,” he said. “There are a lot of crosscurrents of uncertainty, and we’re not going to close on any of them for weeks, if not months.”
Investors are used to the Fed taking steps to calm markets, but many of the dynamics of stocks, bonds, currencies and commodities are beyond the control of the central bank, with Mr. Ryder saying: “The Fed is not solving the corn supply crunch. Or fertilisers, or the inability to get natural gas in Europe. They can’t make enough inventory of households.”
The dip is a U-turn from the stock’s runup in 2020 and 2021. Then, unusually low interest rates and a rising money supply—by-products of the government’s efforts to avoid a recession—have repeatedly pushed stock indexes to new highs. Some investors say the fall was long overdue and now that it has come, it may be difficult to recover.
Melissa Firestone, a 44-year-old economist specializing in the energy market, sold several of her individual stocks and bought a fund that shorts the S&P 500, betting on a drop. “The Fed is going too far, inflation is a nightmare and the real estate market is going to crash,” she said.
Keith Yokum, a novelist and retired publishing executive who is 70, moved a third of his savings to a money-market fund last year. Mr. Yokam doesn’t like keeping that much money in cash, especially when inflation is reducing its value, but sees some better options.
In October, when stock prices were still hitting records, Craig Bartles moved most of his 401(k) and individual retirement account savings to money-market funds. Soon, he sold his cryptocurrency holdings and began shorting Homebuilding Stock and Tesla Inc. through a brokerage account.
Zionsville, Ind. A 46-year-old real-estate broker, Mr. Bartels looked to the distant past for advice, reading Ray Dalio’s recent book on economic history and Adrian Goldsworthy’s “How Rome Fell: Death of a Superpower”.
“It feels like us right now,” she thought.
His 20-year-old son, a college student, told him he was trading a few thousand dollars through a Robinhood account. To Mr Bartels, it looked like another sign of reckoning to come.
A generation ago, he himself was a day-trading college student. They did well, he said, but knew many people who were “throwing money into Internet stocks and had no idea what they were doing.” The dot-com bubble of the late 1990s soon popped. Today, Mr. Bartels is glad he changed course when he did. “I don’t think we’re anywhere near the bottom,” he said.
Don McLeod, a former research manager at a Manhattan law firm, retired four years ago when the markets were strong. He happily checked his 401(k) account almost every day.
When the stock began to turn in January, he kept checking daily in fear, until the losses became too great. By early May, their retirement accounts had declined 25% in five months.
Mr McLeod hopes the US is not headed for a repeat of the “inflation” of the 1970s. “When you’re banking on the money you’ve saved to last your life and it starts to go away, you feel helpless,” he said. “I don’t want to go back to work at 66.”
Susan Wagner, a recently retired person who moved from Chicago to New Mexico’s Rio Rancho with her wife in 2020, took her retirement money completely out of the markets this month.
“The worry was really I was going to lose sleep, tossing and turning at night,” Ms. Wagner said. His wife, a former radiologist, was hesitant, but eventually agreed. “It was very nerve-racking, and I was quite passionate about it,” Ms. Wagner said. “I was very upset by what was happening.”
Jim Kahn, chief investment officer for Wealth Enhancement Group in Minneapolis, said his clients are more nervous now than they were in 2008, the year of the financial crisis. The question he’s asking: “Where can I go to stop being poor?”
The firm held webinars for clients on the worst days of the market last year, warning against loading up on tech stocks and high-end names like Peloton, Mr. Kahn said. Recent webinars have a different topic: don’t panic.
The firm is looking at commodities that protect against inflation and is being fueled by the war in Ukraine, and municipal bonds, which Mr. Kahn said are starting to look attractive.
Technology stocks that have risen in recent years, such as Facebook parent Meta Platform Inc. and Netflix Inc., have been particularly hard hit. Disappointing results or a dark outlook have decimated tech stocks and, in painful moments, helped drag the broader market down.
Sonu Kalra, Portfolio Manager, Blue Chip Growth Fund, Fidelity Investments said that so many bad days are starting to fade away at once.
Mr. Kalra was sitting in his suburban office in Boston in early February when Meta shocked Wall Street with disappointing earnings. When he saw its shares fall in after-hours trading, he was angry at himself for not heeding earlier warning signs.
“You feel a lot of pain and start to question: ‘What could I have done differently?’ “They said. “But you can’t cry over spilled milk. You have to move on.”
At the time, he thought Meta’s issues were silly and not indicative of a broader withdrawal from growth stocks. That came later, when Russia’s invasion of Ukraine pushed energy prices higher. “Oil penetrates everything,” he said.
On Wednesday, Smeat Capital Management Inc. Cole Smead, a portfolio manager at U.S., woke up early in Phoenix. Target, whose stock is about 5% of the Smad Value fund, was set to report earnings. Target stock was down in double digits in premarket trading. Mr. Smed put on a suit and headed for his office.
That morning, the target was hovering 25% below Tuesday’s close. Mr Smed decided that it was not useful to stare at the screen and see his fifth greatest position in freefall. He picked up a book on the biography of George Hearst, the silver miner father of William Randolph Hearst.
“I thought he would probably teach me more than the market that day,” he said.
Traditional investing wisdom says that over time, the stock markets go up. Countless investors watched their savings grow in the decade following the financial crisis by staying afloat in a booming market. Those who worked hard when the market crashed in early 2020 were rewarded when stocks resumed their upward climb within weeks.
For some market players, this year’s decline feels different. The government’s extraordinary stimulus measures pushed the economy into a V-shaped recovery in 2020, which has been replaced by policies aimed at controlling inflation. While the debate about whether a recession is on the way is yet to be settled, there is broad agreement that the US has entered a period of slow growth.
McCaffrey, an 80-year-old retired research scientist, has been buying shares of Apple in recent weeks, automating purchases when the price is below a certain level. But overall, it has been a disappointing experience to see the shares of his favorite tech companies fall. Apple is down 23% so far this year.
“It’s getting worse for people in my age group,” McCaffrey said, “simply because we don’t have time to wait for it to come back.”
It takes a long time to shake off Kevin Landis, a fund manager whose tech-focused fund was battered by technical wreckage in the early 2000s. But when Netflix announced disappointing quarterly results in April, Landis, sitting in his home office watching his quiet suburban San Jose backyard, felt as though he had been hit by an earthquake.
Mr Landis had reason to be concerned: Roku, another streaming company, made up 14% of its tech funding in late March. He says he hasn’t sold any shares, even though Roku’s stock has fallen about 60% this year.
“Maybe the defining difference this time around is the last time I can leave the office and go home,” he said. “This time, I am working from home. So there is no way to avoid it.”