Barry Ritholtz at The Big Picture has an interesting graph from the Yale University School of Management:
Buying the dips is a reflection of confidence in the market heading higher. Over the 21 years displayed in the graph there have been significant differences between the confidence of institutional and individual investors, but none as dramatic, consistent and long trending as the last 15 months. Since early 2009, the confidence of individual investors has moved steadily lower, while institutional investors have trended to higher confidence.
From late 2003 to 2005, in the recovery of the market after the 2002 lows, there was much greater confidence by individuals than institutions. The current rally has been just the reverse.
Curiously, individuals and institutions both lost confidence in closely coupled behaviors through 2006 into 2007 and then gained confidence together from early and mid-2007 to the market lows in early 2009. Or at least the tendency to buy dips was increasing during that time span. As soon as the market lows were passed, individuals gradually lost confidence while institutions kept piling on.
I have heard a lot of discussion in recent months about whether individual investors have been avoiding stocks. Although it doesn't address the allocation of assets to stocks, this data would indicate that the confidence of individual investors has been shaken.
Disclosure: Long several individual stocks.