Brett Ward was financially savvy enough to retire six years ago at the age of 43 and live off his investments. But by January, Wall Street's relentless drumbeat of bad news had convinced the Tarpon Springs investor to yank all his money out of the markets and put it in gold and real estate.
"I liquidated everything, six figures, and I lost enough to buy a small home,'' Ward said. "I'm very fed up. … I believe we're at the bottom. I just don't want the stress of the market.''
So much for the ol' buy low, sell high strategy.
The pressure on stock investors to throw in the towel builds daily, even as planners warn against it. After the worst February in 76 years, the markets tumbled farther Monday with the Dow falling more than 4 percent to its first close below 7,000 since 1997. The S&P 500 fell almost 5 percent to hit 700.
"As bad as things are, they can still get worse, and get a lot worse," Bill Strazzullo, chief market strategist for Bell Curve Trading, told the Associated Press earlier in the day. Strazzullo said he believes there's a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000, respectively.
Rodney Johnson, president of H.S. Dent in Tampa, understands investor anxiety to sell.
"They've been told over and over that if you buy and hold, you'll be better off," he said. "Now they're holding on to this ball of kryptonite.''
But before you turn your paper losses into real losses, consider the heavy costs of capitulation, local financial advisers say:
Historically, bear markets pave the way for strong bull markets.
Even if the markets slide further, it's hard to time jumping into the market on its way back up. And based on previous recessions, the stock market tends to be on the upswing before a recession ends.
"I believe we'll look back at this in 10 years — with the Dow at 6,800 or 6,900 now — and say, 'Gosh, how come I didn't invest more? What a buying opportunity,' " said Ray Ferrara, president and CEO of ProVise Management Group in Clearwater.
There are few safe havens for investors in this climate, particularly if you define safe as a return that comfortably beats inflation.
Rather than retreat entirely from stocks, advisers suggest you diversify your holdings. Don't stay concentrated in any one stock or any one industry. Johnson of H.S. Dent, for instance, suggests investors avoid volatile industries like financial stocks and consider precious metals, pharmaceuticals and high-quality corporate bonds.
If you're in it for the long haul, cashing out now could jeopardize your retirement.
Bob Doyle, who heads Doyle Wealth Management in St. Petersburg, said worried customers come to him asking to keep their money safe, to prevent their capital from dwindling to zero.
"What I'm saying is, 'Let's define safety in another way,' " Doyle said. "It's not necessarily the risk of losing your capital, but the risk of outliving your capital."
Money placed exclusively into "safer" vehicles like a certificate of deposit would not pay enough in the long run to offset inflation and provide a steady flow of income for later in life, he said.
There are few scenarios when it makes sense to cut back.
Doyle can think of two types of investors where that applies — one who doesn't have the stomach for turbulence and one who doesn't have a long-term horizon to reap returns. In both cases, he said, they probably shouldn't have been in the market in the first place.
Perhaps the most queasy factor for investors trying to ride out the storm is that this recession seems different than past ones. Whether or not that perception is true is a matter of debate.
Johnson of H.S. Dent doesn't expect to see "a general, nice, broad S&P rally" like those that have accompanied past recoveries. He urges investors to stay in the market but pick their stocks and funds carefully.
"What we were told for the last 25 years is that if you just hold on through these down times, it comes right back," he said. "For 25 years they were right, and that's the problem. … All of that is a presumption that this case looks just like those and it's just not true.''
Doyle, of Doyle Wealth Management, disagrees. He finds the current bear market very similar to the one in '73-'74 and the recession unemployment levels similar to those of '81-'82.
"I think this will end like all the others: with a resounding bull market,'' he predicted.
People have a tendency to believe the environment they're currently suffering through is worse than anything they've ever experienced, Doyle added.
To the notion that the current downturn is unique, he defers to a quote from Sir John Templeton, the mutual fund pioneer who died last year:
"He said, 'The four most dangerous words in investment are: This time it's different.' "