This, not the current rally or last week's selloff, is the key question. We are perfectly willing to say "the selling is over," and many people want to pronounce an all-clear.
I think we have entered into a particularly difficult moment for equities. They have made us no money as an asset class for a decade. They have become, on a daily basis, simply impossible to game. The notion of "buy and hold" has been decimated by the action as buying and holding even the most blue of "blue-chips" has become a total loser's game.
And we are soon about to see the recognition that you will not be able to retire on stocks, not able to retire with a 401(k) that's so, so low.
There are plenty of opportunities to rent stocks after they have been hammered, but to just own them is something that may very well be impractical as a way to make long-term money.We hear endlessly that we have to stay the course. But if staying the course means losing 30% or 40% in a short period of time, it is becoming hard to justify that large a commitment to equities. I know we have been in a horrible bear market, and I know it will end. I know that the medicine the governments are producing will avert a severe depression. But I have been struck with the irrationality of stocks and the subsequent lack of faith we have in them and the skepticism that must be shown this asset class. That doesn't mean you can't buy stocks when they get to liquidation values or when dividends make them an attractive asset vs. fixed income. But if you don't come through this period with a notion that stocks, en masse, have failed us, I don't think you actually care about how you do and have simply been brainwashed that what matters is holding them, not profiting from them.