I think the market is still undervalued.
Until the major S&P stocks are trading at P/E ratios of 10, I think we are quite undervalued and have a ways to rise. GE should trade at least over $15/share-20/share, MTW should trade $9-15/share, GLW should trade $15-20/share.
For these stocks that is still a 50% gain to be at least remotely fair-priced.
The yields on corporate debt are crazy high right now too - those have a ways to fall.
I have about $3000 still to put into my IRA this year, I'm hoping things stay beat-down a while still this year buy into bonds. Over time, I'd like to start building a corporate bond ladder like TMFdeej. My risk tolerance level is still fairly high after a rough start to my investing back in January 2008.
Over this year, I think we will see a rebound in consumer spending - which I think is already happening. Just from watching here in Alabama, I see lots of people out shopping right now in the earliest months of spring. That's a good sign.
Oil/commodities should start to recover this year too.
Basically - we went through a period where people became generally frightened. When you can't say when the market will stop falling - that's downright scary. The markets in general have become quite strange over the last two years. Commodities went up through the roof - then hit the floor. Now treasuries are up through the roof - they'll hit the floor eventually too.
I think corporate bond prices will be the next bull market - since the yields are so high right now. Once indicators make the economy look less shaky, the yields will fall - I think this will be happening by 2010. The market won't really recover until the yields in corporate bonds have fallen a lot.
I doubt that we will be above 11000 on the DOW in 2011, but I also doubt we'll ever see 5000 on the DOW. I think 6500 was The Bottom, or is in the neighborhood of The Bottom - if there is a retest. The decrease in risk in buying equities will feed upon itself and things will start to go up.
Fundamentally, the United States is not built on debt, is not built on consumer spending. These might be prevalent trends from the 90s-2010, but this country is one of innovation. We've just hit a big hic-up this last 15 years with massively changing factors. The internet revolution + rise of cheap manufacturing in other countries were destabilizing factors. Before the first world war, there was a similar rise in globalization that destabilized the world too. Things recovered after the world war and there was a tremendous rise in the economy.
Anyways, I plan to keep saving my money, to keep investing in companies - but I am going to start to diversify from owning just stocks into owning bonds. Over the next 20 years, I hope to have a near equal amount in stocks and bonds (a very conservative portfolio), so that the next time the stock market falls apart, I won't have such a bad impact on my savings.
But, things will keep getting better, that I am still sure of. We'll have an interesting century - as billions of people will be getting empowered and start playing a role in the global economy in both India and China. These countries can't be held back - the US will eventually be a much smaller voice in the global world. (Which is why I am trying to learn Mandarin). India's more tricky, there are so many languages/dialects - I guess some dialect of Hindi might be useful.
Anyways - good luck everyone, wish you the best.