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 last 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 retiree in Mingo Junction, Ohio, who is sticking with his investment plan for the moment, though he’s not sure that’s wise. “After (the) upswing last year, it probably isn’t going to continue.”
Small investors around the world were on edge even before growing signs of a slowdown in China and plunging emerging-market currencies sent stocks sharply lower this week. They were fearful stocks had climbed too fast, and were overdue for a drop, after soaring by double-digit percentages in countries like the U.S., Japan and France in 2013. 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, they have more cause to believe one may be at hand.
The Dow Jones industrial average has swooned 5 percent from a recent peak after investors became unnerved by reports of a manufacturing drop in China and economic mismanagement in countries like Argentina that sent the nation’s currency plunging.
“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.