The saying "Put your money where your mouth is" doesn't apply to the American investor. Corporate profits may be on the rise, but investor confidence in the market is not. A poll by Prudential finds that 58% of investors have lost faith in the stock market, while 44% say they never plan to invest in U.S. stocks again.
Yet Americans haven't changed how they invest, pouring $85 billion into mutual funds in this year's first quarter and $700 billion since March 2009, according to fund tracker Morningstar--up 250% and 43%, respectively, since before the financial crisis. That's surprising, considering the pains Americans suffered at the hands of the fund industry in that period. A recent Government Accountability Office study found that those who took brokers' advice on 401(k)s fared worse than those who didn't. And a Fidelity study found 401(k) gains had far more to do with account holders' and employers' contributions than their funds' performance.