Here's my completely uninformed financial opinion.
The Dow has dropped 35% in one year. Considering the current economy, it's probably quite true that many stocks were quite over-valued a year ago, maybe by 35%, even 50%? But I can't imagine long-term that it's much more than that.
This isn't to say that there's no risk left and we are "at bottom". I imagine a large number of companies, including some stalwarts, are going to fail in the next year. But, as a whole, if we have 5 or more years to recover, most of the stocks are going to come back. (Ignoring interest, if it takes 5 years for a stock to get back to 2007's level, that's a 7% per annum growth.)
If I already had a job and didn't plan on moving in the next 24 months, I would seriously think about finding some cash to put in now. As it is, I might need all the spare cash we do have in savings to move and pay rent before the pay checks arrive in the near future.
Ignoring that, if I had time to research, I'd look for companies with low debt ratios and high liquidity and buy a few of those. You don't need super earnings from stunning new products on this pure value buy. You just want a nice stable company that can live through the next two years and come out the other side okay. However, since I don't have much time to research individual stocks (or expertise to judge), I guess I'd just buy a broad index so that the failures I can't avoid are only a portion of the holdings.
Moreover, while the financial industry is leading the charge into insolvency and taking many of us down with it, it's not like we aren't going to have banks in the future. If I had a good lead on which ones will make it, I might specifically want to buy some financial stocks.
If I had long-range money.
What do you all think? No way you are putting retirement savings in the stock market now? Or are you buying everything you can? Are you singing "t-bills, t-bills, buy what you will, i live for t-bills?" Or are you just shocked that I just did a finance related post?