If you think it was bad for our market last year, you haven't seen what happened in emerging market economies. As this chart shows, Brazilian stocks lost almost 71% of their value (in dollar terms) from last May through November 21st (which now is looking like THE bottom for most risky assets). Since then they are up a whopping 45%.
These markets were crushed by panic and forced selling of all risky assets, compounded by the fact that collapsing commodity prices were rapidly empoverishing these economies, since they rely so heavily on commodity exports. And to top it off, their currencies collapsed as the dollar soared against everything. It was a Perfect Storm.
Now we are seeing a bottoming in commodity prices, a somewhat weaker dollar, and a gradual return of the appetite for risk. In the jargon of today, investors seem to be putting back on the "carry trades" that they were desperate to take off last year. After bouncing along a bottom from mid-November through late December, the Journal of Commerce Metals Index has bounced 10%. Crude oil futures are up 35% from their pre-Christmas low. Soybeans are up 25% from their lows a month ago. The future of the emerging market economies is suddenly looking far less dire. If the global economy avoids a catastrophic collapse, as seems increasingly likely, there is lots more room for improvement here.
Full disclosure: I am long SLAFX as of this writing.