Something funny is going on in America. We enjoyed double-digit gains in the stock market in 2009 and 2010, and 2011 is well in the black, but the percentage of Americans owning stocks has been shrinking. Meanwhile, real estate investments have been rising, even though the housing market has yet to recover.

The folks at Gallup recently reported that the percentage of Americans saying they hold individual stocks, stock mutual funds, or stocks in their 401(k) or IRA hit 54% in April. That's an all-time low in the 12 years that Gallup has been measuring ownership, after a 2007 peak of 65%.

Ignoring the big picture
You can mostly explain this phenomenon in just four digits: 2008. The stock market's plunge of nearly 40% that year shook many people up so much that they took their investing balls and went home, vowing never to invest in stocks again. Indeed, Gallup found that only about one in four Americans consider stocks their best long-term investment. A similar percentage think savings accounts and CDs are best. Meanwhile, 33% believe most in real estate.

Historical data contradicts those feelings, though. The long-term average annual growth rate for real estate is around 5%. Per data from Ibbotson, the stock market (as measured by the S&P 500) has averaged 9.7% annually between 1926 and August 2010, while long-term government bonds averaged just 5.6%. Savings accounts and CDs also offer slow growth for your money.

Clearly, the significant majority of Americans with little faith in the stock market are losing out on considerable possible profits. Check out how much money they might accumulate over 25 years if they invest $5,000 annually, earning 3% (what they might make in savings accounts or CDs), 6% (what they might average in bonds), or 10% (what they might make in stocks):

Growing At:

$5,000 Invested Annually for 25 Years Grows To:

3% $188,000
6% $291,000
10% $541,000

Carpe diem
While markets do slump or crash from time to time, the overall trend of the stock market has been upward over many decades, and it has outperformed most alternatives as well. Getting out of the market after a crash is ill-advised, since you'll miss out on recoveries.

Consider Ford (NYSE: F), which gained 337% to become one of the best-performing stocks of 2009. That rise followed a 66% drop in 2008. Similarly, Freeport McMoRan Copper & Gold (NYSE: FCX) gained 229% in 2009 only after falling 74% in 2008. Foreign stocks behaved similarly, with Baidu (Nasdaq: BIDU), one of the most widely held ADRs, more than tripling in 2009 after shrinking by two-thirds in 2008.

Real estate expectations
While it's generally not smart to bail out on a fallen market, it can be quite smart to snap up more shares when they're down. That may explain why so many Americans express long-term faith in real estate. Home prices are still down and out, as foreclosures continue to plague the market. But that sorry state of affairs will change … eventually.

Still, owning real estate requires a major commitment, and the ultimate payoff may not be as strong as with stocks. Thus, if you're drawn to real estate, consider investing in it via stocks, instead of through actual properties. Home Depot (NYSE: HD) and Lowe's (NYSE: LOW), for example, stand to benefit once the housing market picks up. And until then, they're still serving those who have repairs to make, or who have chosen to renovate instead of buying a new home.

You can also invest in wide swaths of the real estate world via real estate investment trusts (REITs). Each represents a basket of companies, diversifying your assets. Some folks are bullish on health-care REITs, given America's aging population. In that arena, Health Care REIT (NYSE: HCN) looks promising, with a mix of senior living properties and medical office buildings. Alternately, you could invest in the whole real estate sector via the Vanguard REIT Index ETF (NYSE: VNQ).

Don't let market crashes scare you more than they should. Expect them now and then, just as you should expect occasional bubbles. Fight the powerful forces of fear and greed as you seek out exceptional investments for the long haul. 

If you're looking for security in your investments, consider healthy dividend-paying companies. Read the Fool's special report on 13 smart stocks that pay dividends. Get your free copy today by clicking here.

Longtime Fool contributor Selena Maranjian owns shares of Home Depot, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Baidu, Ford, Health Care REIT, Home Depot, and Lowe's, as well as writing covered calls on Lowe's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.