A trader on the floor of the New York Stock Exchange the morning after the Dow Jones Industrial Average dropped over 1,000 points on Feb. 9, 2018. Spencer Platt | Getty Images News | Getty Images

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.

Am I prepared?

On the wealthier end of the spectrum, members of the millionaire investor network Tiger 21 also had about 10 percent of their money in cash as of the end of the third quarter. Their biggest holding is real estate, at 28 percent, and in stakes of privately held companies, at 24 percent. Michael Sonnenfeldt, the founder of Tiger 21, told CNBC recently that there are fewer people taking speculative risks. "Given all the risk in the world, people are pulling back," he said last month. And Ian Burnstein, a Detroit entrepreneur who leads that city's Tiger 21 club, said last month that members are talking about weathering a slowdown. "Everyone has asked: Am I diversified enough? Am I prepared?" On Thursday, the Dow Jones Industrial Average swooned for the second straight day after the Federal Reserve raised interest rates another quarter point, its fourth rate increase this year. Investors have been spooked by the prospect of a slowing economy, even though many experts say conditions are still good. The Dow dropped more than 600 points at one point, and dipped to its lowest point of the year. The technology-heavy Nasdaq dipped into a bear market, and companies in the S&P 500 index have lost a total of $2.39 trillion in market value in the month of December.

Big fund outflows