Pros lose confidence in the market

August 23, 2012, 7:04 PM UTC

FORTUNE — The TABB Group, a research firm that specializes in stock trading and technology, is out with what appears to be a concerning stat: Just 2% of professional investors completely trust the market.

It’s become a common line to say that Knight Capital’s recent trading glitch, the bungled Facebook IPO and the 2010 Flash Crash is either adding to or the root cause of individuals’ skittishness with the market. As evidence, people point to the fact that money has continued to come out of stock funds even as the market has rallied. Now TABB is saying it’s not just individuals but pros who are growing nervous.

MORE: Libor and the folly of deregulation

TABB has done this survey a number of times, and taken together they do seem to suggest high-frequency trading and technical glitches are the source of the pros’ growing uneasiness with the market. After 2010’s Flash Crash, 12% of market pros said their confidence in the market’s structure was “very high.” After Facebook’s bungled IPO, the “very high” group had dropped to 5%.

The problem with all this lack-of-confidence talk is that the market’s main gauge of confidence, the S&P 500, is up 11% so far this year. Yes, on light volume. But for the market to be up that much, someone must be putting more money in.

What’s more, fears that the market is some sort of borg-controlled system ready to be taken down by a computer bug is only part of the confidence story. Along with the question about confidence, TABB also asked respondents what they thought it would take to revive investor enthusiasm for U.S. stocks. Slightly less than half of all asset managers and hedge funds who responded to the survey, 47%, did say some improvement in market structure would help. But the next highest response, 39%, was that U.S. stocks “outperform other markets.” What’s more, the most common written-in response, at 8%, for what would boost confidence was “global economy.”

MORE: Why Knight lost $440 in 45 minutes

I’m not saying that our complicated, fragmented market is not a problem that regulators shouldn’t look into. And it’s probably true the market has grown so complicated that a growing number of professionals now don’t truly understand how it all works.

But we should also be careful before lumping in the trading problems into talk of “the death of equities.” The reason stocks have had a lackluster few years could be more mundane than we think. People aren’t confident in the market, because stocks haven’t been going up, at least not consistently. And the economy hasn’t turned around. When stocks go up, and the economy turns around, investors are likely to pile back into the market, which is, of course, what always happens.