Many investors are still too afraid to get back into the stock market, and their hesitancy is putting a drag on the market’s resurgence, the Chicago Tribune reports.

About 6% of 401(k) investors have stopped contributing to their plan altogether, not realizing that they have the choice of putting the money in stable-value funds rather than the market. One investor incorrectly commented, “I am a middle-aged person, concerned about what approach is useful when it comes to socking away money for retirement. My previous strategy of putting as much money into my IRA, 401(k), as possible no longer seems prudent.”

Pamela Hess, a Hewitt Associates researcher, said figures her company has compiled show a steep retrenchment from equities. “People pulled back from stocks dramatically [during the downturn], and we have not seen that reverse,” she said.

Nonetheless, not all reports of investor confidence are gloomy. Fidelity recently reported that after investors decreased overall 401(k) contributions between the third quarter of 2008 and the first quarter of this year, in the second quarter, they increased contributions.

Anecdotally, the decline in those contributions might be due to job losses, as well as those lucky enough to still have a job concentrating on building up emergency savings, rather than preparing for retirement. It could also be due to the fact some employers are no longer matching employees’ contributions, and some have stopped automatic enrollment.

Regardless of the reason for investors’ aversion to the stock market, if more of them don’t return to equities, the market won’t deliver strong gains, if any, for the foreseeable future. With about $12.4 trillion in stocks, individuals could have a big impact on the stock markets since they control $13.4 trillion in retirement assets. As the Tribune puts it, “individuals’ decisions to choose stocks, bonds or other assets for nest eggs are important for the direction of the market.”

So far this year, investors have poured $208.4 billion into bond funds, far more than the record $140.6 billion they invested in 2002 following the dot-com crash.

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