CHICAGO -- Cheryl and Jim Friedman, retirees in St. Louis, had two-thirds of their retirement money in the stock market in 2008. When the financial crisis struck that fall and stocks lurched up and down with nauseating speed, Cheryl Friedman, a former accountant, pulled the money out.

Fearing that the next crisis was always around the corner, they have kept most of the money out. It's parked in a money-market account earning a meager 0.1 percent per year. The Friedmans have watched in agony as stock prices doubled over the past three years.

"I have a whole lot of money sitting on the sidelines, because I'm afraid," she says. "The little guy is thinking, 'Well, things are good again now, I'll get back in.' And that's when they pull the rug out from under you." Three years ago Friday, the Dow Jones industrial average closed at 6,547, its low during the Great Recession. Retirement accounts across the country had been devastated since October 2007, when the Dow hit a record of 14,164.

Big three-year run

Last week, the Dow closed above 13,000, although it has fallen back slightly. It has been one of the greatest three-year runs in the history of the stock market, exceeded only by the dot-com stock craze of the late 1990s and the recovery from the Depression.

Some people gritted their teeth through the steep losses and poured more money into stocks while the market was still in free fall. That daring paid off in the returns of a lifetime.

"I felt that either the world's going to end or it's the smartest time ever to invest," recalls Harvey Bookman, 60, of Brooklyn, who has made up his initial market losses many times over by buying when stock prices were low.

Bookman bought shares of Avis stock for 41 cents apiece on March 4, 2009, five days before the bottom. He sold them in September 2009 for $11.92 apiece. Total profit, minus commission: $46,026.

For many, however, even a doubling of the market has not been enough to draw them back in. The scars of the 2008 crash, when the Dow lurched up or down by 500 points or more in a day and people asked aloud whether the economy itself would survive, are that deep.

Large investors rule

Since the March 2009 low, there have been only two months in which individual investors put more money into stock mutual funds than they took out, according to EPFR Global, which tracks funds.

The fuel for the market's ride higher since 2009 has come from big institutional investors.

Small investors like Doug Heuring, 40, of Cape Girardeau, Mo., vow to be ready for the next crisis. Heuring, a medical technologist, snatched up some biotechnology stocks "when the market was on sale." His portfolio is 30 percent or more above where it stood when the crisis hit. He knows he could have done even better had he been bolder. But at least he didn't flinch when the market tanked.

"You've got to stay the course," he says. "A lot of people panic when their stocks hit lows, but if they're good companies, they will come back."

That is not so easy for Cheryl Friedman as she watches market chatter on CNBC all day, waiting for the right time to get back in. But the timing never seems right. Not when the crisis was fresh, and not now, when stocks are up more than 20 percent since early October.

"It's very difficult to know what to do," says Friedman, 63. "I should have just sat back and waited. But when you're at this point in life and there's no way to replace your assets, you can't afford the risk."

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