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 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?
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.
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.
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."
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.
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