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With stocks up, is the individual investor back?

Traders work on the floor of the New York Stock Exchange on January 28, 2013 in New York City.

The stock market had an impressive January. The Dow was up nearly six percent last month, its strongest start to a year since 1994, and is now near a record high. Some economists believe the positive trend is an indication that small, individual investors are jumping back into the market after fleeing during the financial crisis.

"If you look at the mutual fund figures, and the exchange traded fund figures, yes, the individual investor is coming back into the stock market," says Marketplace economics correspondent Chris Farrell.

"The individual investor is more into the market, partly because they're making a big bet along with the professionals," he explains. "And, along with companies who have been buying back their stock, by the way, in massive numbers, everybody's making the same bet at this point, or this juncture, or our history -- the U.S. economy is going to continue to recover."

But does that mean you should start playing the stock market game, too? Farrell advises using reason and caution before making any investments.

"It's a fool's game, it's hazardous to your wealth. Think about your circumstances, think about what you're trying to do, save your money. If it makes sense to have some money in the market, that's fine. If it doesn't, just save your money."

About the author

Chris Farrell is the economics editor of Marketplace Money.

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