Two and a half years of unrelenting declines have certainly made clients worry. Many have pulled out of the market. Others are so frightened they won't even consider doing anything at all — unless it's hoarding gold bullion and bottled water. Here are a few of the more common objections and questions reps are hearing, and some answers.

Objection: What long-term impact will all of these accounting scandals have on the market?

Response: The analyst conflict-of-interest scandals and the revelations of financial shenanigans committed by corporate executives have made individual investors more cautious — no doubt about that (which is probably a good thing). But it's highly unlikely that these scandals will leave a permanent taint on the equity market.

Not to make light of today's problems, but each bull market breeds its own abuses. With the excess of the New Era of the 1920s, you had bear raids (by brokers against their highly leveraged retail investors) and investment trust abuses, which led to two important anti-fraud laws in 1940. In the late 1960s, we had IPO abuses. In the 1980s we had the Milken/Boesky insider trading mess and the S&L crisis. Just as those abuses were eventually wrung out of the system, so too will the excesses of the Internet bubble and the accounting scandals. Optimism shall return (someday), the capital formation process can begin again, and stocks can move higher.

Objection: I used to think the stock market and the economy were inextricably linked. If the economy is getting stronger, why is the market still doing so badly?

Response: The equity market and the economy are linked — over the long term, anyway. The problem is, over shorter periods of time, investor emotions can drive prices excessively high (the tech bubble) or way too low (the late 1970s and early 1980s). So, the market may not correctly reflect economic reality week to week or even month to month. Often, the market has been strong when the economy has been weak because it was anticipating an upturn from a recession. In other cases, the market has turned weak while the economy was still strong — investors were predicting an eventual slowdown or recession.

And sometimes the market has just done its own thing. For example, in 1987, stocks tanked — without any apparent economic reason. (As the economist Paul Samuelson once quipped, “The stock market has predicted nine of the last five recessions.”) One could argue that we are paying the price now for the excess enthusiasm that dominated the last few years of the 1990s. Only now, the pendulum has swung, and the uniform pessimism and tide of bad news just doesn't seem to stop.

If anything, this might prove to be the best time to buy equities — when all seems hopeless. It is then that securities tend to be mispriced (remember the banking crisis in 1990?) and that one can find a deal.

Objection: This isn't a typical downturn.

Response: In terms of market downturns, this one is a little worse than others were. The typical bear market lasts about 16 months. This one is heading toward 24 months. On top of that, stock indices have dropped, in percentage terms, to levels last seen in 1973 to 1974.

But it's not a typical market in its relationship to the economy. Generally, in the early stages of an economic recovery, which we appear to be in, the market goes up. But this is one of those exceptions where the market has decoupled from the trend of the economy because it is still correcting for the over-exuberance of the late 1990s.

Also, remember that the unprecedented happens all the time. From 1966 to 1983, the Dow Jones Industrial Average fluctuated between 600 and 1,000. Equities were so mired in that range that in 1979 BusinessWeek ran a cover titled, The Death of Equities. Of course, that marked the low point, and within a few years, the Dow broke through 1,000, on its way to producing a record bull run.

Question: When will the market turn around?

Response: No one knows. Besides, investors should not focus on it anyway. Trying to time the market is a loser's game. Create a long-term plan, be diversified and take advantage of low prices while they last.

Question: What do I do until the market turns around? Should I continue to fund my retirement or wait?

Response: Stick to your long-term financial plan. If you're a long-term investor, you have the advantage of being able to invest at much lower levels than you did a few years ago. Still, it's a good time to review your portfolio and to be reminded of the risk you are taking. If you feel you have too much risk, take steps to correct that, but nothing too drastic.