Average investors are frustrated that the U.S. government is no longer among the world's most creditworthy and fear Monday's stock plunge may not be the end.
And even though many suffered steep losses when the market tumbled three years ago, some now appear more willing to ride things out, figuring their portfolios will eventually recover.
The question is whether they'll be patient enough to stick with their plans. Any market rebound seems distant, given the spate of bad news about the economy and debt problems here and in Europe.
The hope is that Standard & Poor's downgrade of the U.S. debt rating could spur Congress to take the painful steps needed to ultimately strengthen the economy
"I'm sort of glad it happened," says Matt Moscardi, a 32-year-old researcher with a Boston financial services company. "My investments might get killed in the short term, but there's some serious dysfunction in our fiscal policy."
Friday, S&P cut its credit rating for long-term U.S. government debt by one notch, from AAA, the highest rating, to AA .
The Dow Jones industrial average had already plunged 10 percent since late July, and it responded to news of S&P's move by tumbling more than 600 points.
Corporate profits remain strong, which is a key reason why the Dow remains about 70 percent above its March 2009 low. Yet the recent decline appears to be a reflection of what many average Americans have felt since the recession officially ended two years ago. They continue to face persistently high unemployment, flat wages, a stalled housing recovery and fear that Washington has only begun to squarely address its debt problems.
Many investors were confident that they've adequately protected their investments for another rough stretch. After the 2008 financial crisis, Carol Clemens, a 64-year-old retiree from Edmond, Okla., loaded her portfolio with dividend-paying U.S. and foreign stocks. With corporate earnings remaining healthy, she doesn't have any immediate plans to sell.
"I expect there are still lemmings left who must run for the cliff, but I will not be among them," Clemens says.
Her reaction to S&P's debt downgrade: "I'm just glad that one of the ratings agencies finally had the gumption to take a stand and tell Congress and the president: 'You've gone too far, guys. It's time to get real.' "
"I'll be watching for the panic to turn, because a crisis is a terrible thing to waste," says Dick Bristol, a retired Air Force major and dividend-stock investor from Biloxi, Miss.
While Bristol fears the market decline will be prolonged, the 73-year-old believes S&P "has done us a favor" by potentially pushing the U.S. toward greater fiscal responsibility.