Despite Rally, Investors Stay on Sidelines

(CBS)  It was exactly a year ago that stocks hit a 12-year low, dealing a serious blow to a lot of retirement accounts.

Since then, the market has staged a remarkable comeback, rising 61 percent. But as CBS News correspondent Anthony Mason reports, you had to be in it to win it.

Stocks have had one of their greatest rallies in history, but millions of investors have missed it.

"We don't see any increased activity from the public," said investment manager Ted Weisberg.

Weisberg has thousands of customers at Seaport Securities, but they haven't been pouring money back into stocks.

"The activity level is the same today as it was a year ago," he said. "Yet the market has rallied 4,000 points from the low."

In fact, investors have pulled $40 billion out of U.S. stock funds since the start of last year.

On the floor of the New York Stock Exchange, the panic of a year ago has been replaced by caution. its estimated that more than $3 trillion in investors cash is just sitting it out on the sidelines.

With her 401(k) down 22 percent, Kim Proescholdt, who works in marketing for a California hospital, has taken a more active role in investing her money.

"Everything is so volatile; it's so unpredictable; it's so uncertain," she said. "Every hard-earned dollar I make - I want to make sure it goes someplace safe.

She's moved into other investments like bonds.

It's possible that there's been a fundamental shift in attitudes towards stocks after the recent crisis," said Alan Valdez of Kabrik Trading.

"That's what we're concerned about … because we have not seen the average investor get back into the market yet," he said.

Even with the rally, the Dow is still down 25 percent from its all time high in 2007. Weisberg says investors saw the economy have a near-death experience:

"They're scared. They're still scared. And I don't know what it will take to change that."

Most of all it could take time - maybe years - before investors are comfortable with risks in the stock market again.