Despite impressive stock gains, MoneyShow’s Jim Jubak points out that most investors are still reluctant to get back into the market, making it difficult to predict how high it can go.

Pick up a newspaper these days, or listen to CNBC, and the headlines blurring out at you are "Market Hits Heights, Recovers to Pre-2008 Levels…"Â It’s all about how great this rally has been.

There’s no doubt about it, the rally that sort of began depending on how you look at it—if you go back to coming off of the November lows, by early February we’re up 25%. This is a huge rally.

What’s really interesting is it doesn’t seem to have convinced most individual investors. They’re still on the sidelines, they’re still in other forms of CDs or low-yielding Treasuries. But basically I think we’ve seen…enough bear markets. We’ve had the technology crash, we’ve had the commodities crash, we’ve had the gold financial crisis and the mortgage crash—all these things, I think, have really changed people’s attitude towards the markets.

I think what we’re seeing now is that people are really, really reluctant to get back in because they think it’s a fake. They think that it’s sort of like the old Charlie Brown/Lucy football thing, which is that Lucy promises she’s not going to pull the ball away from Charlie Brown this time and he’s really going to be able to kick the football, yet of course what she does is she pulls it away.

I think people have the same reaction: they’ve’ been through this, the rally is kind of enticing, but they know how it comes out, they think. They know that it comes out with some kind of boom followed by a bust and net/net, they wind up with either at best no money or an actual loss.

I think that’s keeping a lot of people on the sidelines, and it makes it very hard to judge this market, because normally you’d say there’s lot of money on the sidelines so this market is going to go up for a while yet. The problem is if the money is on the sidelines and more of it is permanently on the sidelines, it’s very hard to gauge well how much fuel there is available to drive this market up.

I think we are looking at some really long-term changes in investor behavior, with individual investors that tend to I think going forward leave the market to the professionals, to the traders. And that will really rally put a damper on the amount of fuel that’s available to drive it ahead.

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