Just a few miles from the gloom of Wall Street, Milan Sukhia was smiling as he walked out of a Fidelity Investments office in New York.
The reason: The $1,500 he used to put mostly in stock mutual funds every month has been going into a money market account since last fall.
"I'm staying on the sidelines until there's good economic news," said Sukhia, an accountant from Old Bridge, N.J.
He and many other market players, from small-time stock buyers to large institutional investors, are parking cash in money market funds, certificates of deposit and other steadier investments while they wait to see how low the stock market will go.
Money market funds are not as exciting as stocks, but lately they have been a lot safer. Money market funds posted average returns of 4.85 percent last year, while stock funds averaged a 3.78 percent loss, according to industry-tracker Lipper Inc.
The big question for Wall Street and Main Street is: What will it take to get that money back into play in the stock market?
"If I can see a six-month span where the economy is turning around, I'll be back on the bandwagon most definitely," said Barbara Hardeman, a bank employee in her 50s from New Orleans.
Hardeman put $3,000 in a stock mutual fund six months ago, and contributed $1,200 more little by little, but got worried because her fund kept losing money. She cashed out two weeks ago for $3,851.
"I'm more comfortable with money markets," Hardeman said.
In addition to the huge drop in technology stocks, investors are worried about poor corporate earnings reports, hints that a recession may be in the offing and depressing economic news from places like Japan.
In January, investors put a net $140 billion into investment funds. Of that amount, a record-breaking $99 billion was poured into money market funds, according to Lipper. And the February figures are expected to show a greater exodus to money market funds.
Fund analyst John Lloyd of Merrill Lynch anticipates that more than 27 percent of investors' long term-assets will be in money markets -- a level not seen since 1996.
"They're still putting boatloads on the side," Lloyd said. "People are losing money in the market and they want to bail until the bottom occurs."
When will the cash be shifted back toward stocks?
"I'm sure it's going to go back, but no one knows when," said Joseph Kalinowski, a strategist with First Call/Thomson Financial. "If we did, we'd all be on a beach with a laptop, trading."
Sukhia, the accountant from New Jersey, generally discusses investments with several friends while commuting to New York by bus. They are trying to figure out when to put their money back into the stock market.
"Me and my colleagues on the bus want to see a couple of good signs, like better earnings from companies and the economies here and overseas getting better," Sukhia said.
The huge amount of money being kept out of the stock market doesn't necessarily hurt the economy, said William Sullivan, an economist with Morgan Stanley Dean Witter & Co.
While it might be difficult for companies to raise cash from the stock market or through bonds, banks that have received an influx of cash now have more money to lend to companies.
"That money is still is in the financial system," Sullivan said. "It's not as if the system as a whole has lost lending or investing ability."
Investors putting cash into money markets may reconsider if the Federal Reserve cuts interest rates again, as expected. That would mean a drop in the interest rates on money market funds.
"Right now 5 1/2 percent to 6 percent looks pretty good," said Dan Laufenberg, chief U.S. economist at American Express, "but if we get down to 3 or 4 percent, investors might move to longer-term investments or something more risky like the stock market."