More than 6½ years into the bull market, many investors still haven't regained their confidence.
That, at least, is the impression two high-level strategists at Charles Schwab find when they speak to clients. Despite a rally that has seen the surge 212 percent since the March 2009 lows, the collective psyche remains fragile.
Jeff Kleintop, Schwab's chief global strategist, spoke Tuesday to the thousands of registered investment advisors at this week's IMPACT 2015 conference, cautioning them about how "really pessimistic" their clients' sentiment has become.
"It seems like you've got some hope about the future. That's great. I don't think your clients do right now," he said. "The last six months, investors seem to have lost some hope."
No doubt it's been a difficult year. A variety of factors has convened to make this one of the most turbulent years since the bull market began as the Great Recession ended.
For the year, the S&P 500 is up just over 1 percent after a huge rebound in October.
However, the flow of money tells a different story. Investors have pulled more than $125 billion out of equity-based funds this year while putting more than $95 billion into bond funds, according to Bank of America Merrill Lynch.
"I'm not getting anything on the optimistic side anymore," Kleintop said. "Nothing about optimism — it's all about the risks. It's China or (Russian President Vladimir) Putin or the immigration crisis in Europe. Nothing on the optimistic side. I'm sure you've heard it, too."
Kleintop's answer for the RIAs with the difficult clients: Hope.
"Investing is an act of hope. It requires optimism about the future. It's essential. So we've got to build some hope here today," he said. "I think the naysayers are wrong. Hope is a strategy. It's not a short-term strategy. It's a long-term strategy."
More specifically, Kleintop encouraged advisers to think globally about their investments and tie them to sector performance.
Canada, for instance, is less desirable now because it is "one giant leveraged energy stock" at a time when energy is doing poorly. Japan, conversely, "is essentially the tech and the financial sector" at a time when both are poised for gains, in Schwab's view.
Overall, Schwab has remained neutral on U.S. equities this year, a stance born out of belief that this would be a more volatile time. In such a climate, investors should focus on diversity, said Liz Ann Sonders, the firm's chief investment strategist.
Sonders used a visual known as an investing "quilt chart" to show which strategies have benefited the most in 2015.
"It's really extraordinary how rampant the volatility was this year in terms of asset classes moving in and out of favor," she said. "Even in a one-year time frame, a broadly diversified portfolio is generally always in the middle."
Sonders agreed with Kleintop's view about investor attitude.
"I can't remember the last time I got a question at a Q-and-A that had a positive tinge to it," she said.
Both strategists, however, said the high level of investor fear is unfounded. Even though corporate earnings may post consecutive negative quarters, the broader economy is not close to recession, Sonders said.
"Markets tend to care more about better or worse than they care about good or bad. They're not going to be enthusiastic participants until the data is good," she said. "What they should really understand is when it stops getting worse and starts getting better, that's your best entry point."