HispanicBusiness

There's no shortage of uncertainties, either.

Dorsey says investors are worried about the presidential election in November, unaddressed solutions to the nation's fiscal troubles and potential changes to the tax code.

Periodic scares coming out of Europe, such as poor readings on the health of eurozone economies, political upheaval and sharp surges in the yields on European government bonds -- which spark fresh concerns about another financial crisis -- do little to bolster confidence.

When it comes to jumping back into the market after steep declines, individual investors historically have not been "early adopters," says Tobias Levkovich, chief U.S. equity strategist at Citigroup. They typically don't move back into stocks until the market has moved up sharply and they think it's safe to get back in.

Yet investors have lived through so many wild swings recently that they worry that "just when they think it is safe to dip their toes back in the water, the shark shows up again," Levkovich adds.

Walter Zimmermann, analyst at United-ICAP, says these Chicken Littles might actually be behaving rationally.

"Our work suggests that caution is warranted here -- not boldness," he says. "We view those on the sidelines as making the prudent choice."

Despite investors' caution, their level of fear is much lower than it was during last summer's stock swoon or at the height of the financial crisis. A closely followed Wall Street fear gauge closed around 19 on Monday, below the 48 it hit last August and well below the peak reading of around 80 in October 2008. In general, a reading below 20 suggests investors are calm and not fearful.

What's needed

So will investors ever rekindle their love affair with stocks? If so, what will bring them back?

"Some investors may be waiting for sanity to come back into the markets," says Axel Merk, chief investment officer at Merk Investments.

Restoring investor confidence in the U.S. economy and job and housing markets will go a long way toward making investors feel secure and ready to take more risk, says Gina Martin Adams, institutional equity strategist at Wells Fargo Securities. "A broad spectrum of economic data has an impact on investors' risk tolerance," she says.

Don Luskin, chief investment officer at Trend Macrolytics, takes a more cynical view of investors' likely behavior.

"It is in the nature of things that they won't come back in until they shouldn't," he says. "They don't understand that there can be no superior returns without risk. They will come in when they think there is no risk, at which point there will be no return."

James Paulsen, chief investment strategist at Wells Capital Management, says investors are likely to gravitate back to stocks if the S&P 500 climbs another 14.3% and gets back to its 2007 all-time high of 1565.

Stocks will also appear more attractive when bond yields start to rise, causing bond prices to fall and principal losses for investors. "Stories that highlight how much investors invested in steady-eddy, safe havens underperformed relative to stocks" will push them back into stocks, Paulsen says.

Maybe. Maybe not.

Arlene Armstrong says she will hide out in money market funds for now but will consider buying stocks again when "the market dips."

Ruff, who trimmed his stock exposure to 45% from 65%, says he won't be a big buyer of stocks until the market suffers another sizable swoon like 2009.

Hoffman, however, says that because of his age and with retirement approaching, it's unlikely he will ever venture back into the stock market again.

"I am done," he says.