Eventually the economy will stabilize and the market will recover but that probably won’t be happening soon and you should probably prepare for things to get worse ...
By the end of the year the damage from the collapsing housing market and the high foreclosure rate will have worked their way through the system; and then we will start dealing with the damage from a high unemployment rate, loss of consumer confidence, failure of uncompetitive companies (see auto manufacturers), and the massive reduction in capital investment due to lack of credit. When we get through the second wave of problems we will start dealing with the problems caused by an out of control federal reserve, rapidly increasing taxes, massive reductions in government spending, and/or record deficits.
Until we're in a position where the average p/e ratio is between 2 and 5, and/or the typical dividend is in the 12.5% to 25% range I wouldn't make any claims that the market can only go up from here ...
