Stocks have more than doubled since the financial crisis and are closing in on a five-year high, but many Main Street investors have been absent from the party – especially those with the least saved.
Those who missed much of the rally did so because they reduced equity exposure after the benchmark S&P 500 index plummeted 57 percent between late 2007 and March 2009, according to an analysis by Reuters of mutual fund flows and changes in assets held in retirement accounts. Investors with the smallest savings typically saw the lowest percentage recovery in returns.
And while some have returned to the stock market during the subsequent rally, plenty of small investors remain on the sidelines.
"This is the most uncelebrated bull market in history," said Tony Ferreira, managing director at Cogent Research, which provides research and consulting for large fund managers. "In the old days, people would be jumping on the bandwagon, but nobody's chasing equity performance this time. Many people are still scared to wade back into the water."
If the equity upswing continues, some economists fear it could leave middle class Americans financially unprepared for retirement and widen the growing income disparities between rich and poor, which the U.S. Census Bureau said grew sharply in 2011.
It could also complicate President Barack Obama's chances for re-election, with some voters not having enjoyed much of a wealth effect from the stock market's 3-1/2-year rally.
To be sure, plenty of Americans have seen the balances of their 401(k) retirement accounts bounce back since the financial crisis as inertia kept many from abandoning stocks when the market crashed.
But things are hardly like they were during the bull market in the 1990s, which turned many retail investors into addicts for the latest Internet stock offering.
According to figures from Cerulli Associates that are based on analysis of Federal Reserve data, those with less than $100,000 in investable assets on average had $17,975 at the end of 2011, down 9 percent from $19,732 at the end of 2007.
Vanguard Nigeria
Stock market report, im not really into th