The US stock market is at near record levels. So why are some investors still sitting on the sidelines?
The S&P 500 -- the broadest measure of America's stock market -- closed at another all-time high on Wednesday. The index has climbed more than 4.5% this year. The Dow is a whisker away from 30,000 points.
But volatility, geopolitical risks and political uncertainty are keeping ultra-cautious investors out of stocks, according to market participants. The global coronavirus outbreak has added to this skepticism, as the economic fallout from the disease remains to be determined.
Yet there's less money in the market right now than there was during the 2007-2009 recession as measured by the value of money market assets, said Brent Schutte, chief investment strategist at Northwestern Mutual.
"Money market fund levels are still just at levels of 2009, even though they spiked all of last year," said Schutte.
These fund assets now stand at $3.6 trillion, the highest level in more than 10 years, but still below the $3.9 trillion peak in January 2009.
Investors pulled their cash out of the market in droves during the recession caused by the financial crisis. The economy recovered, and the S&P 500 has rallied more than 250% since then. But money market asset levels show that some investors are still cautious.
Irrespective of macroeconomic risks and temporary selloffs, US stocks are near record highs.
The US market remains a goldilocks investment environment where everything is just right with a relatively strong economy coinciding with low inflation, Schutte said.
But the more investors who get off of the sidelines and back into the market, the better it is for stocks: "There's still a lot of cash on the sidelines, which is why I think markets could still move higher," Schutte told CNN Business.
This means investors shouldn't worry about the market's almost daily all-time highs and should jump on the bandwagon.
In 2019, stocks were helped higher by the Federal Reserve's shift to loosen monetary policy, which outweighed concerns about the US-China trade war. The S&P 500 climbed nearly 29% last year, its best performance since 2013.
Worries about trade have receded since the United States and China agreed to a 'phase one' trade deal and Congress approved the USMCA deal to replace the North American Free Trade Agreement. This has helped lift stocks, as trade was the biggest point of uncertainty last year.
"Being out of the market at the moment is one of the biggest mistakes you can make," said Matt McCall, founder and president of Penn Financial Group, on CNN Business' digital live show Markets Now on Wednesday.