For savers, all of the pain, little of the profit

Penny rolling on a stock chart.

If you stayed with the stock market during this record-breaking ride, you're probably feeling pretty good about your retirement accounts right about now.

Unfortunately, many small investors have been left out of the party, after fleeing stocks during the recession.

If you count yourself among that group, you locked in your losses and missed out on a huge, albeit Federal Reserve-fueled, market recovery that saw the Dow Jones Industrial Average close the first quarter 131% higher than its recession low.

But much of the gains have been realized by large institutional investors. They swooped in and took advantage of buying low when the mom-and-pop investors backed out of the market.

This is the understandable, yet wrong reaction many people have when the market falls. The smart move is to ride the cycle.

But because so many people fall into this trap, it's just a huge indictment of the do-it-yourself retirement push by the government and corporations we've all been forced to endure. No, when left to our own, we don't make the smart decisions with our money.

There are two telling sets of data here.

The first comes from mutual-fund tracker Lipper Inc., which, according to The Wall Street Journal, found that U.S. stock-focused mutual funds, where a lot of 401(k) money goes, have netted $33.6 billion in new funds this year after having been drained of $445 billion between 2007 and the end of 2012.

This is one side of the coin that shows how people fled the market and are now slowly coming back. But is it too late?

Here's the other side of the coin: Consumer savings in bank accounts, excluding business and institutional accounts, had grown to $8.2 trillion by the end of last year, up from $3.8 trillion in December 2001, according to Market Rates Insight Inc. in San Anselmo, Calif.

That's trillion with a T.

Looking for safety, savers poured their money into insured bank accounts (and to some extent bonds), only to be penalized by the Fed, which has rewarded institutional stock investors quite handily.

5 smart moves to start investing in stocks

5 smart moves to start investing in stocks: You've got your financial house in order. You've got an emergency fund. You have little or no debt and a 401(k) set up at work. Now you’ve got a few extra bucks to put away, and you want to make a little more than the measly interest rates CDs are paying these days. Follow our advice, and you'll build a solid portfolio of individual stocks that can grow your money with the least possible risk.

Indeed, this market run-up is the direct result of the Fed’s “easy money” policy. Chairman Ben Bernanke assured the markets that monetary policy would stay the course of prolonged low interest rates through quantitative easing to keep the fragile economy moving in the right direction.

In other words, the Fed is pushing people into the stock market and out of the savings game.

So, if you're not in today, is it too late to act?

Many individual investors find comfort in safe investment vehicles and will gradually enter the market through a shift in their portfolios back to stocks.

The risk of getting in at the end of the run-up is embedded in the lower return on investment. Also, losses may be greater — and there is talk we're in the middle of a Fed-induced bubble — because they didn’t get the advantage of the initial surge.

It doesn’t seem fair that institutional investors with record profits are getting such a large piece of the pie, but the lesson for us as individual investors is to stay in the market for the long run.

We deserve our piece of the pie.