Investors are scared to death of stocks and equity ETFs by extension on the lingering Eurozone debt crisis and fallout from the subprime meltdown. However, history shows the best times to buy are when investors finally throw in the towel and a bear market ends.

It’s understandable why individual investors are afraid of the market. They have suffered through the dot-com crash and the global financial crisis within a decade. U.S. stocks have gone nowhere in 10 years.

“On Main Street these days, investing in the stock market is about as popular as watching a scary movie on a 12-inch black-and-white TV,” writes Adam Shell for USA Today. “Stocks remain out of fashion even though the stock market has risen more than 100% since the bear market ended three years ago. It’s up 25% since October and 9% this year,” Shell wrote. [ETFs Seen Hitting Nearly $4 Trillion by 2016]

Investors have been burned  in the latest decade, beginning with the dot-com bubble blow, the 2007-2009 sub-prime mortgage meltdown and the so-called flash crash, reports Barry Ritholtz for Ritholtz. More investors sit on the sidelines now, afraid to dip back into the market.

The good news is that the latest string of events, and negative reaction of everyday investors is how a bear market eventually wanes. [What are ETFs? -Pros and Cons]

“Investors have suffered a traumatic shock that has caused severe psychological damage and made them more risk-averse,” Carmine Grigoli, chief investment strategist at Mizuho Securities USA, said.

“The scar tissue is still so fresh,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott, in the USA Today story. “If individual investors are not pulling out of stocks outright, they continue to reduce risk by lightening up.”

Look at what’s happened this year: The Standard & Poor’s 500-stock index is up 102.4% since it hit bottom in March 2009. The broader Wilshire 5000 index is up 109.6%, or $9 trillion, reports Adam Shell. And recently, some of the most influential Wall Street investors have mentioned that given a choice between bonds or stocks, equities are still the way to go. [An ETF Trend Following Plan for All Seasons]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.