"A large part of trading has to do with trust, and I don't have it," said Mark Swenson, a 43-year-old plumber from New Hampshire who refuses to buy individual stocks. "When a stock moves up 10 percent, you don't know why. We can pretend that everyone has access to the same information, but they don't."
Even before news broke that federal investigators were looking into whether hedge funds traded on inside information, small-time investors were pulling their money out of stocks.
Americans have yanked $60 billion out of U.S. stock funds this year, according to the Investment Company Institute, a trade group. Investors have piled money into Treasuries and bond funds that are considered safer investments, even if they don't return as much money. Banks such as Wells Fargo have reported that money is moving into checking and savings accounts.
It's natural for people worried about their jobs or the falling value of their homes to sock cash into more conservative investments, but this has been no garden-variety recession.
It has coincided with turmoil in the stock market that goes back a decade, to the collapse of the Internet bubble and portfolio-draining scandals involving high-flying companies such as Enron and WorldCom.
Investors have lived through the housing bubble, the collapse of Wall Street firms such as Bear Stearns and Lehman Brothers and stomach-churning days when it wasn't clear whether capitalism would survive. On top of that came news that financier Bernard Madoff had bilked investors out of billions.
"Virtually everyone on the Street believes there are significant improprieties, and I think there is an even more important point for the massive number of investors who are not Wall Street players," said former New York Gov. Eliot Spitzer. "And that is, for most of us, you can't beat these guys at their own game."
People are nervous about the state of their assets in part because their homes are worth so much less these days, not to mention job insecurity and slow economic growth overall.
Some pros on Wall Street say hesitation by small investors is good news. It means that there's plenty of "dry powder" to propel the market higher in the next few months when and if the little guy finally relents and joins in the rally.
The insider-trading probe could test that theory.
The FBI this week searched the offices of three hedge funds, and some of Wall Street's most influential firms, including Janus Capital Group, have been subpoenaed in the probe.
On Wednesday, an employee of a firm that supplied market intelligence to hedge funds was arrested and charged with conspiracy to commit securities fraud, among other things. It was not yet known whether the man dealt with the funds raided this week.
For Swenson, the allegations of insider trading are unnerving, particularly on top of the "flash crash" in May, when a computerized selling program set off a chain reaction that drove the Dow Jones industrials down nearly 1,000 points in mere minutes.
The sell-off was a reminder to some individual investors that hedge funds and other powerful traders use computer programs to make rapid-fire stock trades, giving them an advantage over the slower smaller investor.
Spitzer said the new insider trading probes illustrate how the game is tilted against small investors.
"If you are sitting there in front of a screen," Spitzer said, "thinking your information is going to be good enough to make smart judgments that will permit you to outperform the hundreds of thousands of people on Wall Street who have access to better information and more timely information than you, you're mistaken."