NEW YORK – January’s global sell-off in stocks has left many small investors more puzzled than panicked – and unsure how to act.
They’re holding on for now as prices continue to tumble, but their anxiety is mounting. The number of small investors who say they feel bearish soared this past week, according to a U.S. survey.
Some stock funds have been hit with their biggest withdrawals since 2012.
If more people start selling, it would reverse a new and surprising trend in some of the world’s biggest economies: individuals moving back into stocks after years of shunning them.
I don’t know what to do, says Ken Duska, a Mingo Junction, Ohio, retiree who is sticking with his investment plan for the moment, though he’s not sure that’s wise.
Small investors around the world were on edge even before growing signs of a slowdown in China and plunging emerging-market currencies dragged some stock markets down to their worst start of a new year since 2010. They were worried that stocks had climbed too fast – and were overdue for a drop – after soaring by double-digit percentages in 2013 in countries including the U.S., Japan and France.
In the U.S., some stock bulls had been bracing for a drop of 10 percent or more, known on Wall Street as a correction. That hasn’t happened in more than two years.
Now, with the Dow Jones industrial average down 5 percent from a recent peak, one is closer at hand.
The question is, Is this all of it, or is there significantly more to come?’ says Greg Sarian, a managing director at the Sarian Group at HighTower, a wealth advisory firm in Pennsylvania.
Anxiety has ramped up in Asia, too.
Clients were very worried as they haven’t seen such market jitters in a while, says Lee Young-hwan, a private banking consultant at Daishin Securities Co. in Seoul, South Korea.
Still, he says, many seem more inclined to snap up stocks now at lower prices than to bail out.
Since the 2008-09 global financial crisis, small investors have mostly dumped stocks – only recently creeping back into the market in some countries.