Whither (or Wither) the Retail Investor?

“What will get the retail investor back in?” an Ohio disc jockey asked me this week.

Good question, since the retail investor has been sitting on the sidelines for quite some time now.

The simple answer is a good rally. Nobody likes missing out on a money-making opportunity, when things go on the upswing people usually jump in.

And that looks to be happening now. According the latest liquidity report from TrimTabs: “Mom and pop are finally putting their money where their mouths are. U.S. equity funds posted an inflow of $1.9 billion in the week ended February 8, the biggest inflow since February 2011. Global equity funds took in $1.7 billion, the biggest inflow since September 2011.”

That observation is supported by the Investment Company Institute, which noted in a recent report that retail money in money market funds (typically parked investment money) has declined a bit in the last couple of weeks.

But it hasn’t been a huge shift…which indicates there are some lingering doubts about whether or not the world is out of the economic woods. It also is likely indicative of uncertainty about the stock market. For all its moves to avoid a repeat, the government still hasn’t fully explained the Flash Crash, has it?

Indeed, as a colleague here pointed out to me, if you are 30 years old or younger, you haven’t seen a sustained bull market during your working life. In fact, all you’ve seen is pretty much the worst decade of volatility and unpredictability ever.

That doesn’t bode very well for getting the retail investor in, does it? Let’s hope greed wins out.

Related: The Retail Investor is Back ....