Investors are likely getting more volatility than they bargained for this late in the year.
With the stock market continuing its downward slide, individual investors may be tempted to sell stocks and sit with their cash on the sidelines until the carnage ends.
Paul West, the managing partner at wealth management firm Carson Group in Omaha, Nebraska, said investors are beginning to question the mix of stocks, bonds and other investments they hold. That's because it's been so long since they've experienced such a sharp decline.
"They haven't felt a sustained headwind for this period of time," he told CNBC on Thursday.
The American Association of Individual Investors found that investor cash allocations reached a nearly three-year high in November, at 19.6 percent. The last time cash was that high was February 2016. Aside from dismal market performance, investors are also being influenced by political uncertainty in Washington, trade tensions and the outlook for economic growth. The allocation to stocks was down 4.9 percentage points, to 64.6 percent.
After the latest rout on Thursday, the S&P 500 was now off 16 percent from its record high in September and now down 7 percent for the year.
According to a monthly activity report last week, clients of brokerage giant Charles Schwab & Co. slowly moved more money to cash in October and November, about 11 percent of their assets at the firm, compared with the range of 10 to 10.9 percent in cash in prior months.