It's a bad idea to maintain any bias - simply do what the market tells you to do. The biggest mistake a "trader" can make is to attempt to intellectualize the market. Day after day you will find people here doing just that - and licking their wounds!
The S&P 500 is still selling at 34 times trailing reported earnings and 27 times consensus earnings estimates for 2002. Historically, the S&P has traded at about 15 times earnings on average, and at the bottom of a bear market it has almost always sold at 10 to 12 times earnings. The market is still overvalued at this point, and it's vulnerable with the economy so very fragile.
Is it really that easy. Don't you also have to take into account the investment alternatives, like interest rates and foreign markets?
I suppose it's not really that easy, which is why the technical picture remains the best one to look at, even for long term investing. It's nonetheless a pretty interesting set of numbers. I just hope if we do see the s&p at 12 times trailing earnings, I have some dry long term (retirement) powder.
Lobster ( I think) is making a good point. Even at the height of the depression, the discount rate was 300 basis points higher then now. I'm not trying to make a bull argument per se. I don't think the selling pressure is ultimately over, at least until half the people who hold stocks in 401ks are forced to liquidate so they can pay for groceries.
It's not that difficult to get "dry powder" back from shorter term trades. I believe the market will pretty much repeat what it did this past year, and in about a year or so we will probably hit THE bottom and start an upward creep that will have more sideways motion than anything. But why would anyone care about that right now? If you ask me what tech stocks will do, I am probably the one person on this planet who has absolutely not a shadow of an idea. But again, why would anyone care?
I think those who are budgeting the federal government might care about when they could once again see a return to tax revenues from capital gains.