Anxious investors hanging on despite heavy stock market losses

It's the watching and waiting that kills you.

Whether it was someone's life savings, a stash of mad money or a retirement account at stake, there was no relief last week. Investors of all kinds will watch with trepidation as the Wall Street clock starts fresh this morning and the stock market reacts to the weekend's events.

Police Lt. Cory Palka of Thousand Oaks and his wife can't bear to look at their portfolio to see how much they've lost.

"Looking would just cause grief and unnecessary despair," said Palka, 45. "The hardest thing is the news every day. It doesn't change the way I live my daily life, but at the same time there's some anguish and frustration."

The officer and his wife, who works in mortgage refinance, have about half a million dollars in the market, including retirement savings, individual stocks, mutual funds and money market accounts.

With more than 10 years before he's set to retire, Palka said he's "not foolish enough" to sell off chunks of the portfolio. "The market is too broken at this point, where it's all or nothing."

Much of the wealth on Main Street is tied up in stocks, typically through mutual funds and often in retirement accounts. Almost 51 million American households owned stock and money market mutual funds in 2007, according to the Investment Company Institute. That amounts to 44% of U.S. households and translates into nearly 90 million individual shareholders.

Most of them have household incomes between $25,000 and $100,000, and about two-thirds are headed by people between the ages of 35 and 64, according to the trade group.

These are the people whose financial security has been hit by the 43% decline in the S&P 500 index, a broad measure of the stock market, since it made its high in October 2007.

"It's frustrating for retirees. If you sell out your entire portfolio at the bottom of the market, then you've really lost. . . . We don't want to sell into a falling knife," said Kay Jaacks, 65, of Orange County's Cowan Heights.

The diversified portfolio of bonds, mutual funds and real estate that Jaacks shares with her husband, Gary, has bled six figures and is down 30% since the beginning of the year, she said.

"I don't see any way out -- the markets will be so volatile and it'll take so long for credit to start moving again that I just feel we're sort of stuck," said Jaacks, who has moved some of her investments to cash.