$1 trillion – that’s a lot of money.
According to CNN, that’s how much money is sitting in retail (individual as opposed to institutional investors) money market funds.
Add to that the billions investors have poured into bond funds and it’s clear there is a lot of money sitting out the stock market, at least for now.
Where did this money come from and where is it going?
A good guess is that a substantial portion of this money fled the stock market at some point, probably close to when the market bottomed in March 2009.
Many stock investors where terrified after watching their portfolio shrink by a huge percentage.
This was money they were counting on to fund important goals such as retirement.
And it disappeared.
While the market staged a strong comeback, it has been whip-sawed by high volatility and some gut-wrenching plunges.
Will these investors ever come back to the stock market?
That’s hard to say, but it is apparent that a large number of investors who previously invested in the stock market may never do so again.
Fear is a powerful emotion and when the perceived risk of investing in the stock market is high, no amount of logic will bring them back.
