't panic. Think long-term. Corrections are normal.
Financial advisers find themselves dispensing calming words and holding hands with uneasy investors as the stock market extends its biggest decline in more than a year.
"It seems a lot of people are just expecting things to continue to unravel and get worse," says Jordan Kimmel, market strategist for National Securities Corp. in Morristown, N.J.
And coming so soon after the worst stock meltdown since the 1930s, though, it's not easy to convince average investors that this too shall pass following another double-digit decline.
Evidence abounds that investor jitters flared up in May. They had been quieted by the market's climb since early last year.
The VIX, a measure of stock market commonly known as the fear gauge, has nearly tripled in the past month. Many financial planners and advisers report getting more calls and e-mail from clients about what's happening. And those clients who are in or close to retirement are particularly nervous — some even moving money out of stocks in search of something safer.
"This downturn may have a dramatic effect on their lifestyle," says Lori Embrey, a financial adviser with Fairfield Investments&Wealth Management in Pickerington, Ohio.
One of her clients, just a week from retirement, is arranging with his employer to stay on longer in a part-time sales position to help offset the decline of the last month.
"Pulling the trigger on retirement with the market in the midst of gyrations similar to what we experienced 24 months ago is bound to give anyone a little heartburn," Embrey says.
The pain stems from a drop of 11.8 percent in the Standard&Poor's 500 index and more than 1,000 points, or 10.2 percent, in the Dow Jones industrial average since the end of April, spurred by worries about European sovereign debt problems.
But it's not just the woes of Greece and its neighbors that have investors unsettled. There are anxieties about high federal debt, 9.9 percent unemployment, financial reform legislation in Congress that may clip corporate profits, weak home prices, China's possible credit-tightening policies and the fragile state of the global recovery.
Many small investors remain on the sidelines after being burned by the steep plunge of 2008-09.
A poll released last month by investment management firm Franklin Templeton found that a majority of those surveyed — 57 percent of 1,010 people — believed stocks were too risky. And that was before the current volatility, when the market was still on a 13-month run that lifted the S&P 500 by 80 percent.
Even some financial professionals feel that way now.
Concerned that Europe's debt woes could infect the U.S. market, Chris Ravsten, an investment adviser for Foxstone Financial Group in Denver, recently decided to move clients' money out of stocks and into bond funds for the next four months or so.
Another adviser, Robert Bernstein in San Diego, says that after watching the European turmoil worsen he pulled the $7.5 million he manages for clients out of stocks on May 5 — the day before the "flash crash" that kicked off the worst of the swoon. "Equities are much more volatile than my bond portfolio right now," says Bernstein, who calls the classic buy-and-hold strategy "buy and hope."
Prospective clients are coming to Chris Hobart, head of the Hobart Financial Group in Charlotte, N.C., lately and asking what's the safest thing they can do with their money and still earn something on it. He has no all-purpose solution, though he does steer people away from piling into gold after its climb to lofty price levels.
"People are fearful that it's going to be a long-term type of thing," Hobart says.
Most investment pros have not abandoned the market, however. They urge investors to stick with a disciplined, long-term strategy that incorporates stocks to give them the best chance to stay ahead of inflation.
The absence of attractive low-risk alternatives, with low yields on Treasurys and minuscule rates on money-market funds and certificates of deposit, lends additional reason to stay in stocks.
A look at the previous 17 corrections — defined as declines of 10 percent or more — since 1946 and how fast the market rebounded from them also may help to soothe concerns. History can serve as "virtual valium," according to Sam Stovall, chief investment strategist for Standard&Poor's.
"A helpful early-warning signal of what to expect in the months ahead may protect an investor's portfolio from themselves, as it may stop the overly emotional from selling out just as the market is about ready to turn around," he says.
Many investors may be getting steeled to market volatility in financially challenging times. Kasey Gahler, a certified financial planner says those he deals with are uneasy in the current atmosphere but understand that big up and down swings are more common these days.
"While consistent 2 to 3 percentage-point swings in one day used to be almost unheard of, today's investors are somewhat accepting it as the norm," he says.
Accepting or not, investors need more than ever to have a long-term plan. That way, they can resist the emotional tug of a bad day in the markets or headlines like the one on CNBC that asked ominously on Monday: "U.S.: The Next Greece or Japan?"
Investors who seek quick solutions may be better off heeding old-fashioned advice instead: Review your portfolio allocation. Make sure you are properly diversified for your age and financial situation. Look for fundamentally strong stocks that may now be available at attractive prices.
Continue to invest during downturns — buying at regular intervals helps buffer the market's ups and downs. Keep enough cash for emergencies. And invest for the long term, not the short.
Scaling back exposure to the markets may be a good idea in some cases, but not in a rush or on a whim.
"If looking at the day-to-day volatility is making you uncomfortable, the solution isn't to change your long-term investment strategy," says Stuart Ritter, a financial planner at T. Rowe Price. "The solution is to stop looking day-to-day."