Wall Street's Ills Seep Into Everyday Lives
Wall Street's Ills Seep Into Everyday Lives
Bradford Roth, the 56-year-old chairman of a Chicago law firm, had a clear strategy for dealing with Wall Street's gyrations when he stopped by a local Fidelity Investments branch Wednesday.
He'd make a deposit to his cash-management account, but he wasn't going to check the balance of his retirement account.
"The less you know," he said, "the better you feel. There's nothing wrong with working in your 80s."
The crisis gripping global finance is filtering into the everyday lives of Americans, spawning confusion and denial, avarice and anxiety, stoicism and black humor. For some it has meant, putting off retirement or long-planned moves. For others, it meant moving their money out of stocks and bonds and into foreclosed homes, gold, livestock or even just having a good time.
"I've been talking to my banker and telling him to get all my money out of the market," said Pat Hurley, a 57-year-old electrical contractor from Phoenix. "I'm really worried -- I think the stock market is going to get worse and worse," he said.
Mr. Hurley has $440,000 in his retirement fund, a sizable chunk but not nearly the million dollars he was hoping for. "I finally got back to where I was in 2001 and now the stock market's diving again," he said.
Bob Conrad, a 59-year-old budget director at the U.S. District Court in Dallas, sees his chance for retirement next year slipping further away. After his nest egg lost 10% of its value, he moved his money a few months ago out of stocks. He thought he was set, but soaring food prices and seesawing energy prices already had him worried. And now, "this thing looks like it's going to get worse before it gets better," he said. "That's just my luck. Looks like I'll be working a while longer."
On the other hand, Antonio D'Souza, a 28-year-old software engineer from San Francisco, sees today as the rainy day to spend his savings. As he watched his 401(k) retirement account lose half its value as of last month, he said, he soured on investing in the market and "decided I was just going to spend."
He bought a $350 juice extractor and a $700 bicycle, spent $600 on four pairs of pants, and then splurged on a trip to Japan. He celebrated, with "the most expensive meal I've ever had," he said, an eight-course Japanese feast.
This week's collapses at American International Group Inc. and Lehman Brothers Holdings Inc. have reinforced his view that "the money is worth more if spent now," he said.
But for many others, the tumultuous events unfolding this past week added to financial strains that have been piling up for more than year. "It starts to make you sick," said 52-year-old Mandisa Lewis, of Maple Heights, Ohio. After losing her job as a secretary, she said she had to tap into her 401(k) account this summer to make house payments. The recent financial news only makes her more anxious: "It gets to where you cry a lot at weird times."
For every person paralyzed by fear or blissfully in denial, there was another leaping into action to preserve what amounted to the fruits of a lifetime of work.
Carolyn Sloane, a 43-year-old paralegal in Wallingford, Vt., officially marked the end of the bull market by investing in cows. Ms. Sloane has been playing the stock market since 1989, but the rattling of Wall Street, she said, gave her a "desire for hard assets." She recently sold all of her stocks and bailed out of mutual funds, and put part of the money in certificates of deposit. But she also wanted the kind of assets she could see in her own yard, so she bought three cows, two of which were delivered on Sunday.
"This is my commodity play," she told perplexed relatives.
Her plan is to breed the cows, black-and-white Belted Galloways. "When they have offspring, that's your dividend."
One investor, Robert, a 37-year-old trader for a private-investment firm who lives in the San Francisco Bay area, lost faith in paper currencies long ago -- especially the U.S. dollar -- and has been buying gold from a mint in Perth, Australia. He keeps it stored there, ready to ship anywhere in the world at a moment's notice. He also said he keeps $100,000 worth of gold coins at his home, which is why he asked that his last name not be used, fearing burglars.
Robert said he witnessed three previous financial crises first-hand as a derivatives trader -- the Japanese bust of the 1990s, the Asian financial crisis of 1997 and the downfall of Long-Term Capital Management in 1998 -- and this is the worst situation he's seen. "Yesterday was the first time I've been spooked in a long time," he said.
In San Diego, 29-year-old Robert Brown, himself a banker, has decided against keeping his money in a savings account or a certificate of deposit. Mr. Brown sees an opportunity in the financial crisis, and plans to invest in buying and reselling foreclosed properties in the Dallas-Fort Worth area. As for the stock market: "I am more of the aggressive type. I can handle the swings and everything, but what I can't handle is that this is not the type of market that is going to make me money," Mr. Brown said.
Those who operate far outside the realm of high finance are having a more difficult time deciding what to do.
With their retirement savings building in a pension fund since 1983, Seattle residents Pat Williams and her husband, Jim, are now questioning their savings strategy. The retirement accounts, which are run by Smith Barney, a unit of Citigroup Inc., were worth a little more than $1 million until four months ago. Since then, Ms. Williams said the combined accounts have lost $170,000.
Now the stock-market plunge caused by the fall of Lehman Brothers and the sale of Merrill Lynch & Co. had their accounts losing an additional $40,000 a day for the past two days. So tomorrow, Ms. Williams said she and her husband are pulling out roughly 75% to 80% of the money invested in their retirement accounts and putting it in a money-market account while they figure out what to do next.
"We just don't have the staying power," said Ms. Williams, 58. "I can't watch anymore of our money go away."
"It's scary to watch this all," said Palo Alto, Calif., attorney Glennia Campbell, 47, who plans to sit down this weekend with her husband to discuss how to allocate their 401(k) investments. "What keeps going through my mind is that scene from the movie 'It's a Wonderful Life' where everyone rushes to the bank and demands to take their money out," she said.
Some people remain defiant.
"I'm not going to panic," said Robert Wilson, 78, a retired banker from Amarillo, Texas, whose money is socked away in bread-and-butter stocks he thinks will be a safe refuge. "You still drinking Coca-Cola?" he asked. "You still washing your clothes? That's Procter & Gamble."
Predictably, all the confusion and anxiety already is leading to some doomsday humor. On the train Thursday from Chicago's suburbs into the city, two traders were overheard having this mordant exchange:
First: "Hey, good to see that you haven't jumped off a building yet."
Second: "Not yet. I'm waiting to move to a higher office."
—Roger Thurow, Vanessa Fuhrmans, Shelly Banjo, Miguel Bustillo, Stephanie Simon, Ana Campoy, Christopher Lawton, John Carreyrou, Betsy McKay, Rhonda L. Rundle and Kris Hudson contributed to this article.