LONG BEACH, Calif. (MarketWatch) — In one sense, mutual fund investors remained steadfast and unswerving throughout a volatile 2011, just as they had for three years before that: No matter the investment climate, they shunned stock funds.

Figures from investment researcher Morningstar Inc. show that funds specializing in U.S. stocks had net outflows of $74.5 billion in the first 11 months of 2011 (December results are still being tallied.).

Funds in this group suffered net outflows of $75 billion in 2010, $24 billion in 2009 — the year that stocks embarked on a rally in which they doubled in two years — and $89 billion in 2008.

Some of the money may have migrated to domestic-stock exchange-traded funds, which have had net inflows in recent years. But the flows during 2010 and 2011 accounted for less than half the amount that fled domestic-stock mutual funds. Perhaps more important, many ETFs seek to profit from declining share prices, so the inflows do not necessarily represent bets on a rising market.

Optimism and omens

There are two plausible explanations for the reluctance to own stocks. One bodes well for the market in 2012 and beyond; the other is a very ill omen.

First, the bullish case: Mutual fund flows act as a sentiment indicator, much like the widely followed surveys conducted of editors of investment advisory letters by Investors Intelligence and of regular folk by the American Association of Individual Investors.

These surveys are viewed as contrarian measures. Decades of market history have shown that bullish sentiment often heralds a market decline, while extreme pessimism precedes a market upturn.

Gold, commodities poised to rise

Surveys reveal what investors are thinking; their actual buying and selling is only inferred. Fund flows measure investment patterns with no inference required; the flows show what investors do, not just what they say.

The relentless selling of stock funds reveals in a particularly concrete way just how low expectations are for the market. Any run of good news could continue or even accelerate the recovery that began in early October.

Unless this time it’s different.

Here comes the bearish argument: Recent research into financial attitudes and habits reveals a disturbing trend, especially among people in their 20s and 30s. It’s not just that they don’t like stocks right now. A significant proportion of them simply don’t like stocks at all.

These investors, the ones who would be expected to provide fuel for stock market growth for decades to come, express disdain for the market. In fact they often refer to themselves as “savers,” not “investors.”

No wonder. Their experience with the stock market mostly involves watching one bubble after another pop, wiping out their parents’ life savings. So, they figure, why bother? Instead their aim is to put more money aside and park it in the bank. Read more: Stock-fund, ETF investors look for a better 2012.

Out of the shadows

So which future is in store? Will investors come around soon and return to stocks, or are they gone for good? No way to know for sure, of course, but I’ll go with the first outcome for several reasons.

1. Investors riveted by the market’s ups and downs can lose sight of the fact that stocks are pieces of real businesses. These companies sell real products and services, and produce real profits from which real dividends are paid. The anxiety that has gripped the market has created valuations well below average, so those real profits can be obtained cheaply, and the dividend yields are hefty, especially compared to what’s available in bonds.

2. No matter how much they dislike stocks, whatever the price, young people will still have to retire one day and meet other financial goals. They can’t do that earning 1% or so at the bank.

3. With or without these buyers, stocks can still go up. This is not the first time that the market has been out of favor. Stock ownership was not as prevalent a century ago as it is now, but the mania that led to the crash of 1929 and the Great Depression were sufficiently significant social phenomena to keep small investors away from Wall Street for decades. Even so, share prices advanced fairly relentlessly.

“This time is different” is often invoked to explain away extreme attitudes and actions. It attempts to justify a belief that the old order no longer applies and that a “new normal,” to borrow another faddish phrase, has taken hold. It’s almost never true. The widespread shunning of stocks has been remarked upon so thoroughly that it recalls the famous 1979 BusinessWeek magazine cover proclaiming “The Death of Equities.”

That issue preceded one of the most almighty rallies in history, in which the Dow Jones Industrial Average DJIA, -0.27% went up by a factor of almost 20 in about 25 years.

A similar move may be too much to hope for, but with hope of any kind so hard to spot, you wouldn’t want to bet against it, either.