The Next Rally
I do not believe the pain of the financial industry is yet over. There is too much over extended debt that is still out there that has been marginal and as things get tighter, will default. The Alt-A mortgages and the commercial real estate and two big problems that have yet to hit the financial markets and these will take another 2 years to work their way through the markets.
There is also the problem of how many people were working for the "speculation industry," you know, all those houses that got built with no one to live in them and that kind of thing. Supplying and working for the "speculation industry" gave quite a bit of employment. Those displaced people are going to be the next round of debt defaults.
So, I right or wrong, I think the markets will not be for the risk adverse (me) for a couple years. However, that doesn't mean that there won't be money to be made. We have already seen significant rallies in this bear. Financial Armageddon has a graph that show numerous rallies in the 1929 to 32 period. I counted 9.
I don't think a bear market is a buy and hold market, but for the nerves of steel types, I suspect there will be some great rallies. Buy on the panic, and sell on the recovery, or keep the losses to a minimum and sell on a 10% loss if the expected rally doesn't happen.