The Bull Market Turns Three. Where's the Party?

On March 9, 2009, the Standard & Poor’s 500-stock index closed at a 12-year low of 676.53, marking the bottom of the worst bear market since the Great Depression. Three years later the economy is improving, corporate profits are booming, and the S&P 500 has almost doubled. None of that has been enough to rekindle Americans’ love of stocks.

The S&P 500 traded at 14.1 times earnings when the market hit its most recent high on March 1. That’s the lowest valuation of any 52-week market high going back to 1989. Trading volumes are down, and investors are pulling money from mutual funds that invest in U.S. stocks. “There really is still a mood of pessimism,” says Kent Daniel, a finance professor at Columbia University’s Graduate School of Business. “There are a lot of individual investors that are terrified.”