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Another big factor is that investors have been unable to shake the bad memories of past market plunges, says Doug Sandler, chief equity officer at RiverFront Investment Group.

"We have been conditioned over the past 12 years into thinking that buying stocks is a bad decision, because they always get beat up at some point," Sandler says.

Adds Bespoke's Hickey: "With two 50% haircuts in the last 12 years, investors think it is just a matter of time before we get the next 50% drop."

The fact that the rally since 2009 has been driven largely by policies of lawmakers and central bankers, such as the Federal Reserve and European Central Bank, has also given investors pause.

Some Wall Street bears argue that the gains have been artificially inflated, and that the unprecedented stimulus measures used by central bankers to reignite the economy and boost confidence are akin to "steroids" or a "sugar high."

Having politicians and bankers determine the fate of markets makes it hard to handicap the future. Says Sandler: "I can't tell you what (ECB head) Mario Draghi is thinking right now. We can guess. But it is different than trying to figure out how Apple's iPhone is selling. That scares people."

But that doesn't mean that there is not a case to be made for stocks.

While the irrational exuberance of the go-go 1990s, or even the heady days of the real estate boom in the mid-2000s, is long gone, the market, at least by common methods used to measure its vital signs, is in far better shape today, Sandler argues. In early 2000, when tech stocks were king and nearing a pre-crash peak, the S&P 500 was trading at more than 30 times its estimated earnings. Today the market is trading at just 13 times estimated profits for 2013, which is below the long-term average of 15 times earnings.

Corporate earnings, which slowed sharply in the second half of 2012, are expected to re-accelerate and grow roughly 10.6% this year, according to analyst estimates tracked by Thomson Reuters.

"Are we bumping up against super-high valuations? The answer is no," says Sandler.

Stocks also look attractive relative to bonds, which are trading at, or near, record-high prices and sporting historically low yields that make it tough for investors to grow their money and build enough wealth to meet their long-term goals, says Garcia-Amaya.

"Relative to fixed-income, stocks look favorable," says Garcia-Amaya.

The broader economy is also performing better, albeit at a sub-par pace. The real estate recovery is also gaining speed. And, despite a still-high unemployment rate of 7.8%, the job market seems to be firming up. All of these developments are supportive of stocks.

Still, there is no shortage of things for jittery investors to worry about. While the nation narrowly missed falling off the fiscal cliff, investors are now confronted with another fight in Washington over raising the debt ceiling and ways to cut the deficit.

Still, there are signs that individual investors' distaste for stocks might be waning.

Last week, Lipper reported that stock funds, including mutual funds and exchange traded funds that invest in both U.S. and foreign shares, took in $18.3 billion in the week ended Jan. 9, the fourth-largest weekly inflow since it began tracking them in January 1992. The combined flows rose just $286 million in the latest week.

"Investors," Needles says, "are finally coming to the realization that the conservative investments they have been in have returned little to nothing."

While some pundits warn that Main Street investors returning to stocks in year four of the bull is a sign of a market top, many other Wall Street pros say it is a bullish signal, as it shows that there is fresh money coming in from the sidelines. It also suggests that investor confidence is rising.

"Net net, it's certainly a bullish.