At the height of the real estate bubble in 2005 and 2006, many investors bet long on the housing market, and flocked to the door to get in on what were then lucrative mortgage-backed securities.

By 2007 and 2008, the housing market had exhausted itself, and triggered a severe decline in the housing sector. Investors once again flocked to the door, only this time to get out.

Moral of the story: Investors tend to think in packs based on market sentiment.

To highlight this phenomenon, caution still lingers among investors, four years after the 2008 financial crisis, according to a recent survey by T. Rowe Price. 

Thirty-seven percent of investors say they are now refraining from investing in stocks because of current economic or market conditions, and as many as 76% of investors say they are only somewhat or not at all willing to take on more risk to obtain a potentially higher yield.

“The lack of faith in equities, even among long-term investors, is troubling,” said Stuart Ritter, senior financial planner with T. Rowe Price. “Historically, stocks have provided more long-term growth opportunities than bonds, short-term investments, or other vehicles that are generally considered to be more conservative.”

The online survey, conducted in August by Harris Interactive, a custom market research firm, for T. Rowe Price, drew from 850 adults in the United States aged 21-50 with at least one investment account.

While 61% of respondents believe that investing in stocks is very important or important to helping them achieve their retirement savings goals, the crisis appears to have ushered in a new era of financial prudence. With respect to their personal savings, 81% of investors say they are saving about the same or more than they were before 2008.

“Investors have experienced a lot of market turbulence and tough economic times over the last several years, so it’s understandable from an emotional perspective that many of them – including younger investors – might be reluctant to invest in stocks,” said Mr. Ritter. “[But] for investors with a long time horizon and enough tolerance for volatility, stocks have always been the best asset class for growth potential and for staying ahead of inflation.”