20111018 goldmansachs
Financial professionals work in the Goldman Sachs booth on the floor of the New York Stock Exchange near the end of the trading day July 22, 2010 in New York City. - 

Kai Ryssdal: Ah, Goldman Sachs. The brightest light on Wall Street. The best of the very best. Isn't that what we're told? Yeah, except for this past quarter.

Goldman reported earnings this morning. It was a loss. A big loss: half a billion dollars. Other banks have seen their profits hit by the markets too -- JPMorgan, Citigroup, the usual suspects. So if the big guns can't handle this market, what hope do the rest of us have?

Our New York bureau chief Heidi Moore reports.

Heidi Moore: If you believe that we have nothing to fear but fear itself, you don't have money in a mutual fund. Fear moves stock prices. And all summer and fall, you've seen fear wreck your 401(k).

Jeff Schwarte manages a stock fund for Principal Global Investors. He said that what makes investing dangerous right now is what Wall Streeters call "correlation." We might call it "groupthink." It works like this:

Jeff Schwarte: When the market's up, almost every stock is up. When the market's down, almost every stock is down.

Schwarte said fear in the market makes it irrational. Bad companies to see their stocks rise with the good ones. The market looks broken.

Sal Arnuk at Themis Trading has seen this too. Arnuk said that most small investors usually run for the exits at exactly the wrong time. But he's not surprised. It's hard to have faith in the financial system.

Sal Arnuk: We have a moral duty as participants in the market to make sure that the primary focus for the market is for investing -- and not gambling, and not trading.

Big investors are as worried as small ones. The market doesn't seem to be working for anybody. And that's hurting even the banks that are supposed to master the markets, like Goldman Sachs.

In New York, I'm Heidi Moore for Marketplace.

Follow Heidi N. Moore at @moorehn