SACRAMENTO -- For investors, one word says it all about the wild swings in the stock market: anxiety.
Financial advisers say many of their clients are deeply worried -- even fearful -- and looking for guidance. Skyrocketing oil prices and free-falling housing values, among other economic trouble, have hammered many portfolios.
A year of mounting difficulties -- a severe housing slump, a global credit squeeze, an unprecedented spike in oil prices -- has strained the financial system to its limits. More people and institutions are staggering under debt. Now come reports that Freddie Mac and Fannie Mae, the two key pillars in mortgage lending, could be facing insolvency or a government takeover.
"This is a historic time," said Jim McCarthy, chief operating officer of Legacy Capital Management, a money manager. "This is a period that will be reviewed in the history books and studies. There will be lessons learned."
But until the lessons are learned in the future, what should investors do now? Here are some options to consider from the pros.
Try to ride it out -- This is the old favorite, based on the past usually repeating itself. Bob Dreizler, an independent financial consultant, said the adage still holds, even if history may look slightly less predictable now: If you don't need your money for five to 10 years, hang tough with your portfolio.
"The hard part is when to get back into the market," he said.
"People wait, wait and wait too long. When it does hit bottom -- and I don't see bottom right around the corner -- it's usually a fairly rapid bounce-back."
Richard Vandagriff, 66, is retired. He said he is keeping his money in the stock market, though seeing it batter his investments "has been just brutal."
Yet Vandagriff, who retired recently from Vision Service Plan Inc., figures he'd do more damage to his wallet if he pulled out now.
"I don't believe in market timing," he said. "I'm in it for the long haul."
At Morningstar, the big Chicago-based investment researcher, Personal Finance Director Christine Benz said investors who can stay the course -- and she thinks 10 years is a good timeline -- will see the best results.
"Bottom line, if you have a long-term time horizon, stocks are going to be your best chance at earning a decent rate above and beyond inflation," she said.
But advisers say many clients are scared by the falling market. So they're suggesting another option to ...
Lower your risk level -- This is more of the middle ground.
"One thing you can do rather than jump in and out is lower your risk," Dreizler said. "Say you're at 70 percent stocks. Go down to 60 percent." Of course, he acknowledged that some people are now beyond taking such a suggestion. They can't take it anymore. They're not gamblers. His advice, then, is to ...
Move into cash -- This is the safest option, the one used by some of the region's wealthiest investors.
"We are about preservation of capital first and growth second," said McCarthy of Legacy Capital.
McCarthy said many of the firm's clients, with more than $1 million in assets and an average portfolio of $2.5 million, have moved to safe Treasury bills and high-quality bonds over the past year.
"We've been moving into cash and not riding it out," he said. "For us, it's wealth preservation."
But most investors aren't moving en masse to cash -- yet -- said Jerry Kinlock, president and chief executive of Sacramento Credit Union.
At Golden 1 Credit Union, Chief Financial Officer Donna Bland said more people are leaving stocks and mutual funds for money market accounts, short-term certificates of deposit and high-yield checking accounts.
"It's started off gradually this year, and now it's picking up," she said.
But cash has a natural enemy: inflation.
"Cash, at least in my view, can be a pretty risky place to put your money," said Morningstar's Benz. "Inflation is so high and yields are so low. Inflation will gobble your purchasing power."
So can college-age children. Do you have a 529 college savings account or a similar account that invests in stocks or mutual funds? Then maybe you should consider ...
A shift to bonds -- When or if you should do this depends on how soon your child graduates, said Tiffany Austin, spokeswoman for Boston-based Fidelity Investments. If it's next year, then think about safe investments such as bonds, she said.
"But if they won't need the money for a while, two or three years, they should probably stick with what they have," she said. "They'll be in long enough to ride out the cycle."
That means other investors may be able to ride it out, too. If so, it could be time to think about ...
Buying stocks -- "This is a tremendous opportunity to buy low," said Bob Daly, financial adviser at Sacramento's River City Bank. "Look at the financial sector. It's been obliterated. Bank of America is a great value right now. People are looking at the energy sector, too."
In the end, advisers say what to do comes down to who you are.
"There are gamblers and people who would never gamble," said Dreizler. "You have to match up what you invest with your comfort level."