In trying to ascertain which way stocks are headed, analysts keep comparing current markets to those of the past fifty years of so.
Yet when you read and hear reports about the crises that have been unfolding in the credit and housing arenas, as well as various parts of the economy, the timeline usually extends much further back (e.g., "It's the worst bla-blah-blah since the Great Depression").
Under the circumstances, some might wonder why equity analysts aren't also expanding their frame of reference to take into account trading conditions during the 1930s, when the last big credit bubble burst.
Maybe it's because they are cheerleaders? Or clueless? Who knows. Whatever the reason, expect to see more articles like the following, "Experts Don't See Extended Bear Market," from the Dallas Morning News.
With many investors suffering deep losses, it's hard to accentuate the positives. However, it's worth mentioning that bear markets don't last forever.
Many bear markets last only a year or so, and there have been some bears that lasted only a few months -- 1961, 1966, 1987 and 1990. The median bear market is 15 months -- meaning half fall short of this time and half longer.
If we are indeed in a bear market, this one probably won't be nearly as painful as the 2000-2002 bear that washed away about 50 percent of the value of the S&P 500.
That's because stock valuations aren't at the absurd levels that they were during the dot-com era, said Eric Bjorgen, a money manager at The Leuthold Group in Minneapolis.
"We don't see this as being a severe or extended bear market," he said.
Also, there's a huge amount of cash parked on the sidelines not yielding squat. About $3.6 trillion is languishing in money market funds earning a paltry 2.5 percent or less.
"That money is just waiting for a market catalyst, and it will come back into stocks," said Marc Pado, U.S. market strategist at Cantor Fitzgerald in Los Angeles.
Wise investing, especially during tumultuous market downturns, is difficult because it requires moving against the crowd.
"It's easy to say that one should sell when everyone else is buying, or be buying when blood is running in the street," said James Stack, a market analyst and editor of InvesTech Research. "It's an entirely different matter to actually do it."
Stack and other savvy money managers, however, build their reputations by doing just that. One of the biggest mistakes inexperienced investors make is to assume that the economy and the stock market always move in tandem.
That's really not true. The stock market is a leading economic indicator, and it typically will fall six months before the onset of a recession. Similarly, the market will start to rise even while the economy is still mired in recession because it sees better times ahead.
"The stock market is one of the best, if not the best, leading economic indicator," said Bjorgen.
In fact, the market's sell-off that began in late fall was the first indication that the economy was heading toward recession in early 2008.
The point for investors now is to realize that the market will start to move higher -- perhaps this summer -- even while the broader economy remains in recession.
In other words, investors who wait for the recession to be over before getting back into stocks may miss a large chunk of the rally.
That said, these are perilous times for investors and savvy money managers are being cautious and investors should too.
Most advise clients to invest in large, blue chip companies such as General Electric Co., Cisco Systems Inc., Wal-Mart Stores Inc. and high dividend paying companies like Duke Energy Corp. General Electric is a triple-A rated company that pays a 3.7 percent dividend. Duke pays a 5 percent dividend.
It may be tempting to buy shares in some of the beaten down sectors like housing and financials.
While their downside risk is limited after such big losses already, investors must be willing to wait because a recovery in these sectors could be months if not years away.
"I don't think investors need to feel great urgency to getting back into housing and financials just yet," said Bjorgen.
Also, it's safer to move back into stocks slowly over several weeks or months, said James Weiss of Weiss Capital Management, a Boston money manager.
"Put down a few chips and average your way back in," he said. "That way if the market turns down, you can buy more shares at a cheaper price."