Last fall it wasn't uncommon to see a 400-point drop in the market in one day. Nor was it uncommon to see highly regarded financial powerhouses -- like Morgan Stanley (NYSE: MS), Bank of America (NYSE: BAC), and Citigroup (NYSE: C) -- shorted to smithereens. As unprecedented events spurred institutional and retail investors alike to panic and purge equities for cash -- $8.85 trillion accumulated on the sidelines by the end of 2008.

Since March 9 we've seen the market climb some 50%, as more cash has been put to work. As the market has surged it has brought those financial stocks that were battered such as Wells Fargo (NYSE: WFC) or Goldman Sachs (NYSE: GS) some of the way, or all of the way, back.

Given this move, how risk averse are investors right now? Is there still an unprecedented amount of cash on the sidelines? Will the violent volatility we saw last fall resurface? These are the very questions I posed to five experts:

What follows is an edited transcript of what the experts had to say:

As a measure of risk aversion, there was an enormous amount of cash on the sidelines this winter. How does the money flow compare with the beginning of the year? What are you seeing?

David Kelly: What we're seeing is that people are less risk averse. They are putting money back into both stocks and bonds at this stage. We've seen positive flows into stock mutual funds as well as bond mutual funds.

[Though], we're still seeing more money flow into bond mutual funds [than stock mutual funds]. So, while it's a little bit better, I think people are still very skeptical. They're putting some money into equities as well as fixed income, but in general I think consumer confidence and investor confidence is still very low.

John Linehan : ... it's clear that a lot of people had a fair amount of cash reserves built up. When the economy started to stabilize and the market went higher, it put people in a position where they had a lot of money to put to work, which has driven the market higher. They're far less risk averse since March. I think you see it best in corporate spreads -- Treasuries or in fixed income. Spreads blew out to the widest levels ever and you've seen them come back convincingly in the last several months.

Uri Landesman: I think it's more positive. In the last few months we've seen investors more scared about missing the recovery than about getting in and having the platform blown out from under them like last year.

While there was definitely an unprecedented amount of money on the sidelines, both from retail and institutional investors, I think it's started to flow back into the market. We've gone from a maximum, high-risk averse stance to a much greater appetite for risk. Witness the performance of emerging markets this year, which tend to be the highest-risk equity investments.

That said, no one is 'digging their heels in at the plate.' No one is throwing money in and saying I'm willing to own risk for the next two years. People are dipping in, but they're pretty finicky. I think if they hear there can be a double dip in the recession, or a new area of financial services that has trouble, I think they would become risk averse right away. They've got some risk bets on, but at the first sign of trouble people are going to be quick to take profits.

Bob Doll : Yes. It certainly has improved. Is there as much cash absolutely or relative to the size of the market as there was? No. But is there still a fair amount? Yes.

Bernie Schaeffer : According to data from www.ici.org, institutional money market assets have decreased from $2.5 trillion in mid-January to $2.4 trillion currently...In January 2008, there was only $1.9 trillion in institutional money market funds.

Based on this data, it is our belief that there is still a "risk-aversion" mentality and thus a significant amount of cash among the institutional crowd that can still be deployed into the market.

Are you expecting volatility to pick up in the last months of the year? Continued...