I've noted this before, because it's important to keep things in perspective. This bear market has been awful, no doubt about it, much worse than I expected. There are lots of things to be worried about: the prospect that Obama could win and raise taxes on capital next year; the government intervention in our markets; the fact that the politicians who got us into the subprime mess are now the ones in charge of fixing it; the political class seems to be completely ignoring its own, key role in the mess, and are thus likely to prescribe the wrong medicine to a sick patient; the fact that the economy seems to be slipping into a recession; the fact that the rest of the world seems to be following us down; the fact that markets are paralyzed by fear; etc.
The silver lining to this is that there is a lot of bad news out there, and the market is pricing assets to the expectation that the bad news just keeps on getting worse. Meanwhile, as I've been noting all along, things aren't nearly as bad as people think they are. And a lot of the mess has been cleaned up already, and housing prices are rapidly adjusting lower, and the market is clearing, and people are still able to borrow, and life goes on. Unless you are just totally pessimistic about the ability of this economy to get back on its feet, every decline in equities from here just makes them a more compelling purchase from a long-term perspective. Meanwhile, if you're hiding out in cash, you're only earning 1% or so. That can be eclipsed in just a few hours of market action.