Retail investors are still on the sidelines and not completely in the market, said John Bogle, chairman and founder of the Vanguard Group, but he said that this won't stop stocks from being major "income generators" over the next decade.
"Retail investors have lost confidence in active management and that's why you see these flows pouring into index funds out of actively managed funds," he said. "That's a trend that's going to persist."
He said that investors "feel burned" because they've paid high fees for poor returns and have lost trust in the market. "It seems very, very likely that over a decade stocks should give a return of 7 percent per year," Bogle said, "that's a 100 percent return on stocks" if his expectations are realized.