The stock markets' leading economic indicator: fear

Fear has gripped the financial markets, with stocks falling to the lowest levels in more than 10 years. This week the Standard & Poor's index of 500 stocks fell by more than 6 percent on two consecutive days. That hasn't happened since the Great Depression. Here's what analysts say is going on. (Warning: It's disturbing.)

Sam Stovall, chief investment strategist at Standard & Poor's Corp: "People are saying, 'If I can salvage 50% of my money, it's better than having nothing left.' It's emotions driving it all."

Tom Schrader, managing director at Stifel Nicolaus: "The wealth destruction is phenomenal."

Bill Buechler, president of Buechler Capital Asset Management in La Jolla, Calif.: "It's wiping out all the retirement savings in all the 401(k) plans. We'll have a whole generation of people whose retirement plans have been wiped out."

Mark Eveans, a veteran money manager with Meritage Portfolio Management Inc.: "I've never seen it like this. You could almost compare this to a 100-year flood."

Gordon Charlop, a managing director of trading for Rosenblatt Securities on the floor of the New York Stock Exchange: "Guys were a little bit bewildered by the force of the down-side action, and are just wondering what will be the catalyst to reverse it. Guys down here are looking to some of the prices of stocks and, like everybody in America, they are perplexed and amazed."

Dana Johnson, chief economist at Comerica Inc.: "Unrelenting gloom has taken over the markets. The economic news, the concerns about some major financial institutions, the concerns about the auto sector, earnings reports, everything is coming out in a way that is just provoking a massive selling in the stock market."

Investment strategist James Paulsen at Wells Capital Management Inc.: "We're just trying to stay away from the windows. This isn't about fundamentals. It's not about bad balance sheets. It's about fear and confusion."

Gus Scacco, managing director at AG Asset Management: "We're trying to make a bottom but we keep breaking through."

Randy Bateman, chief investment officer for Huntington Funds: "People are having to re-evaluate entire investment programs. We're having bear markets and bull markets these days that last 15 minutes at a time."

Business columnist Steven Syre in the Boston Globe:  "The fear is back. The fear in capital markets is different from the near panic experienced in September and October, before governments around the world began organizing plans to deal with a global credit freeze. The cause is different this time, and many of the symptoms vary. But this fear may be more serious, and it's driving markets even further down a very dark hole."

Russell Rolnick, senior vice president for Lenox Advisors Inc: "It's probably going to take another year for things to calm down, for people to feel a little more comfortable with the economy. People these days seem to be more interested in capital preservation than appreciation."

Jon Biele, head of capital markets at Cowen & Co.: "I don't know what the catalyst is going to be where we turn the corner and people start buying stocks wholeheartedly again."

Bruce DeShazo, assistant vice president and an investment adviser at American Heritage Bank of Sapulpa Okla.: "I don't know exactly where that bottom is. When you think it couldn't get any worse is when it suddenly starts to improve, and nobody can predict that."

Marc D. Stern, chief investment officer at Bessemer Trust, an investment firm in New York: "This is a response to real fear. We each have to look inside and say, is the fear warranted?"

Roger Buoen is a managing editor at MinnPost. He can be reached at rbuoen [at] minnpost [dot] com.