Ed Fishel is a year and three months from retirement. Ask him if he noticed that the stock market plunged last week, and the Monkton man will laugh incredulously.
"Are you kidding me?" he said Friday, less than 24 hours after stock-market indexes turned in their biggest one-day drop since the financial crisis. "For somebody like me, who's butting up against their retirement, yes — it's pretty much all we talk about. … This is scary as heck."
Local brokers fielded nervous calls from clients last week. Financial advisers sent out emails urging calm. More than half of Americans have money in the stock market, so Thursday's pain — the Dow Jones Industrial Average dropped 500 points — was felt widely.
The Dow, the Nasdaq and the S&P 500 have surrendered their gains for the year, nearly all of it in the last two weeks, as worries about a faltering recovery and looming public debt in the United States and Europe gained traction.
And that was before ratings agency Standard & Poor's announced after the market closed Friday that it was downgrading the U.S. credit rating from AAA to AA+. The full effect of that first-ever downgrading of U.S. debt — coming on top of bitter political battles and a slumping stock market — is unclear as investors enter unfamiliar territory.
The stock market losses so far are chump change compared with the bleeding in 2008 and early 2009, when concerns about the survival of major U.S. financial institutions sent stocks down, down and down some more. But investors are spooked about the idea of an encore performance.
"They want to sell first and ask questions later," said Jonathan Murray, a Hunt Valley wealth manager who has heard from many clients the last few days.
"Almost to a person, they say, 'We can't take another 2008,'" Murray said. "And especially for our baby boomer clients who are either nearing or in retirement, they're right about that, they can't afford another 2008. … This close to retirement, if it happened again, they might not have an opportunity to make those losses up."
It wasn't until the end of last year that the amount of assets in 401(k) retirement plans returned to 2007 levels, according to the Investment Company Institute.
But Murray, a senior vice president with UBS, is optimistic that the U.S. economy is in a fundamentally better place this time. Banks are healthier, he says, and publicly traded companies are producing good earnings and paying out attractive dividends.
Murray and other local financial planners think the selloff has been driven more by European problems than American ones.
Still, U.S. unemployment remains high, economists are warning that a dreaded double-dip recession is possible and political wrangling over budget deficits is far from over.
That's plenty to be jittery about.
"Fear is kind of ruling the market right now," said Tom Taylor, a principal with Chesapeake Financial Advisors in Towson. "There's a lot of uncertainty, as there typically always is, but the market doesn't like that."
Americans, in turn, like the stock market less than they used to. Fifty-four percent told Gallup pollsters in April that they held stocks or stock mutual funds either directly or in retirement accounts, the lowest percentage since the company began asking the question in 1999.
Nearly two-thirds of Americans were in the market when the financial crisis hit in 2007, according to Gallup, a proportion that has declined ever since. The pullback continued even as the stock market was rebounding strongly.
"The financial crisis and the losses it produced for many investors have combined with government bailouts and Wall Street scandals to turn many Americans away from investing in stocks," Gallup Chief Economist Dennis Jacobe wrote in a research note about the poll results.
Taylor counsels his clients to plan for the long term, with a diversification strategy that makes sense for their age — and so far, he says, they're hanging in there. His company got a few calls last week from people wanting to know why the market was falling — was it all about Europe? — but no one asked to sell.
Murray said the calls to his office have been "nonstop." He emailed clients before the markets closed Thursday to offer words of reassurance: "Every single market decline throughout history came back to make a new high. Remind yourself of that fact."
Fishel, one of his clients, was happy to get that perspective. He's also very glad that he and his wife, Barbara, have planned for their retirement as carefully as they have — saving, considering worst-case scenarios, looking for ways to cut costs.
"The only reason why Barb and I are relatively calm about this is because we've been preparing," said Fishel, 64, who works for the University of Maryland, Baltimore.
"The downside is, it's still scary. I'm sorry, it's still scary. Because we were counting on having a certain amount of money available to us, and it's not going to happen. … We already were planning to live modestly. Now we're going to have to live much more modestly."
Mike Mitchell, 41, has more time before retirement but is "deeply concerned" about what it will look like when he gets there. What's weighing on his mind is one of the underlying reasons for the stock volatility.
"I'm hopeful that the U.S. can come up with a way to solve the debt crisis, because that's the only way to address the long-term structural future of this country," said Mitchell, who lives in Baltimore and runs Habitat for Humanity of the Chesapeake. "And I'm not so sure that the agreement that the president and Congress worked out is real, transformative and effectual."
Nancy Hopkins of Towson is worried about her 13-year-old daughter's college fund. It's invested entirely in stocks.
"I'm very unhappy with this situation, but there isn't anything I can personally do about it, so I'm just trying to cope," said Hopkins, 46, who figures that selling now would be a bad idea.
Lyle K. Benson, a personal financial specialist in Towson, recalls with regret the two clients who sold stocks in March 2009 — just before the market went on a sustained upswing.
"Both clients knew they were doing something that didn't make sense intellectually, but emotionally, they just could not take it anymore," said Benson, president of L.K. Benson & Co. "It was a long downturn."
When some bail out, others buy. But Bruce Alderman, president of Chapin Davis Investments, a financial services company in Baltimore, knows that plowing more money into the stock market as the investments you already have lose ground is often the hardest thing for an investor to do — never mind the "buy low, sell high" maxim.
When stock brokers suggested purchases to clients the last few days, the response has mostly been, "Well, I just won't sell," Alderman said. Investors worry that the market will keep dropping.
"Nobody wants to be wrong," he said.
The trouble for anyone trying to plan for college or retirement is that there's no getting away from risk. Stocks look scary anytime there's a rout, but stuffing cash in a bank account earning practically nothing means losing ground to inflation, said Murray, the wealth manager.
"He said the stock market still could have farther to fall. He hopes people with money tied up in stocks get through the latest roller-coaster ride without giving in to fear.
"That's the enemy to successful investing," he said.