Ordinary investors wrestle with faith in markets

Before the market turned, Rita Thuot, the director of a North Carolina agency that works with developmentally disabled adults, had plans to cut back her hours to part-time in five years. Now, she says, that may not happen for 10 years, at which time she’ll be 70.

The balance in her retirement savings plan has withered from $210,000 to $133,000, about $6,000 less than she had contributed since she started saving in the mid-1980s, said Thuot, who was interviewed in Seattle, where she was visiting family.

Thuot said she’s not panicked but is considering talking to people who know more about investing, and possibly reallocating her 401(K) so that if the market tanks again she’ll be better protected.

“I can’t afford for it to hit as hard again,” she said.

The drop in stocks has similarly unsettled John McNair, 58, who runs a business that sells fabrics to outdoor advertising agencies in Portsmouth, N.H. He had hoped to retire at 65, but the hit to his 401(k) could make that difficult.

“If I have to work until I’m 68 to make back what I lost, then I would,” McNair said as he walked through Centennial Olympic Park in downtown Atlanta on his way to a convention.

McNair said he is more worried about how people around him are coping.

“I called my broker to make sure he was not going to jump out the window,” McNair said.

In Pittsford, N.Y., near Rochester, real estate agent Mary Znidarsic-Nicosia, 45, has also called her broker, but she’s the one who needs reassuring.

“I guess I need a little more hand-holding, like, really, just tell me what’s going on,”’ said Znidarsic-Nicosia, the mother of two young boys.

Znidarsic-Nicosia has resisted cashing out or moving money around. Instead, she has redirected new contributions to her retirement account to a broadly based index fund.

But figures show many individual investors panicked and sold even before a record drop in stocks last week and last Monday’s massive, yet short-lived recovery.

The wild swings in the value of the S&P 500 “have terrified the little guy,” TrimTabs Investment Research said in a report earlier this month. In September, investors moved $46 billion out of stock mutual funds, a near-record amount, the company reported.

Many investors, including younger people who were not planning to draw on retirement funds for years to come, say they believe their investments will recover with time. But even some of them have been jarred by the plummet in stocks and the possibility of a lengthy recession.

“Even the people who should know are confused by the magnitude and breadth of it,” said Ryan Moore, 34, a technology worker at a Boston venture capital firm.

Moore considers himself lucky. The majority of his investment are in bonds and other fixed-income options, but the hit to his stock holdings diminished his total portfolio by 20 percent this year.

Still, even some of those spooked by the stock market’s massive downturn couldn’t resist some of this week’s bargain-basement prices.

Elliot Carlsen, a Seattle lawyer who stayed on the sidelines after the stock market bust earlier this decade, picked up three different large-cap stock funds following last week’s decline.

“People take money out and put it into cash,” he said, but it’s temporary. “They will come back.”

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