"I have no doubt that present conditions offer great buying opportunities for stocks, although only the most iron-willed investor would stroll calmly into equities. If you're a long-term investor, hold as much risk as you can tolerate, recognizing that the current volatility may make a slight reduction in risk appropriate. No doubt, the going will be very tough in the short-term.

"However, for those of us with many tomorrows ahead of us, joining the crowd as it runs for the exits might end up compounding the pain of this ordeal.”

Plainly. I agree - which is why I have recently been recommending committing some of the outsized cash reserves my firm raised around this time last year. I also agree with Mr. Ankrim on investment grade bonds, which “foots” with Carlyle Group’s co-founder David Rubenstein. Rubenstein said: “The 2 best places to invest in right now are in debt markets and Asia.”

When investors can potentially garner equity-like returns from distressed debt, I think it's worth considering. Two such closed-end funds would be BlackRock MuniHoldings Insured (MUE) and Nuveen Insured Dividend Advantage (NVG), both of which have tax-free yields north of 7% and are trading at more than a 20% discount to their net asset value.

Speaking to Asia, we added the iShares MSCI Japan (EWJ) to the ETF portfolio last week. Japan is just plain “cheap.” Not only is the Nikkei 225 trading where it was in 1982 (how about that for buy and hold?), but it's trading at a mere 4 times cash flow.

The call for this week: The 2 questions du jour are: 1) When will the credit crunch end? and 2) How long will the economy remain weak as it attempts to correct the housing situation?

Speaking to the first question, participants need to monitor the credit spreads, which so far have not improved. As for question 2, delinquencies and bank repossessions appear to finally be stabilizing.

If the stock market is a discounting mechanism, the 50% decline in the S&P 500 may have already discounted everything. Moreover, my sense is that participants are now being conditioned to believe that any rally isn't sustainable -- just as they were conditioned to believe that any decline wouldn't gather much traction back in 1999 and 2000.
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With stocks’ aggregate value currently below the year’s GDP, I continue to think a rally of some import is in the works.