Investors in the US have left over $200 billion on the table over the past four years as the stock market defied the economic fears that kept them from investing after one of the most devastating bear markets in history.
The Standard & Poors 500 Index (S&P) advanced 94% over that period, beating the performance of assets in stock mutual funds, ETFs, and closed-end funds.
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The percentage of equity investments in retirement funds also fell by .5% in the face of an average 8.2% gain in stock market rallies that have occurred since 1990.
The gains in the markets have failed to bolster investor confidence after the 2008 financial crisis that wiped out $11 trillion in stock values.
Most of the damage that occurred after the crisis was investor-inflicted as they ignored the earnings of companies whose performance was most closely tied to the economic expansion.
Over 481 of the 500 companies in the S&P 500 are higher now than in 2009 or when they entered the gauge.
Many investors are selling into whatever rallies occur, causing the percentage of households that own stocks to drop. Investors have decreased their ownership of stocks in retirement funds during a bull market for the first time in 20 years.
Because of economic uncertainty, companies are holding record amounts of cash on their balance sheets but investors are too afraid to notice.
The Fed has been trying to push investors into the market by keeping interest rates low. But behavioral tendencies that cause investors to fixate on loss
and volatility outweigh what otherwise would seem to be prime investment opportunities.
Daily volatility on the S&P averaged 1.74% during 2008, 1.58% during 2009, and 1.24% in 2011. So far this year, average daily volatility has calmed to .59%.