That question is not possible to answer exactly without knowing more about your financial and job security. Even then it has no factual answer. You can ask six different investment advisors and you will get twelve different opinions.

That said, historically the stock market turns six to nine months before the economy. It is at a very important nexus right now. If it breaks the November lows decisively, it will continue on down. By decisive break, I do not mean one index brekes it by a few points, I mean most or all of the indexes break their November lows on a closing basis for more than a single day. A weekly close below those levels would be an even more decisive signal.

The only thing that is predictable right now is that massive inflation will arrise some time in the next 24 months. All government economic interventions have a 18 to 24 month lead time. Historically, inflation is bad for the stock market.

For right now. Keep your money in the matress at least until we see if they bounce from or penetrate the November lows.

The talking heads don't seem to realize that cash is an asset too.
(Although a very poor asset during times of high inflation)
Source(s):
Personal experience.

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A good long term investment would be SPY. Its an exchange traded fund that tracks the S&P; 500.
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Simply because prices are low does not mean that it's a bad time to invest. In fact one of the causes of financial bubbles and housing market crashes is that a lot of people think when prices are high, that's a reason to buy, and when prices are low, it's a time to sell. But buying high and selling low is obviously a way to lose money, not make it.

Essentially, it is a better time to be buying now than it was in 2006. If you'd bought in 2006, you'd have lost a pile of money through 2007-8. Even if there's further to go down, it's not as far down as it was from the levels in 2006.

However, if you think prices are going to fall still further then you probably want to stay out of the market for now.

If you are able to analyse companies, you may be able to pick out companies that will come out of the recession even stronger, and new companies that are set to take off. The fact that some of their competitors have disappeared can help. This has certainly happened in past recessions.

If you are a very sophisticated investor with lots of money, you can back your judgement of what companies or industries will do well, and hedge some of the risk with options. (e.g. If you think the auto industry will do badly, but Toyota will at outperform the sector, you buy options on Toyota and short-sell on other auto companies. The whole sector can go down, but as long as Toyota doesn't go down as much as the others, you still come out ahead.) I'm guessing from your question this kind of thing is not going to be relevant to you though.

If you believe things are going to get a lot worse, and stay bad for a long time, you could look at buying gold, which normally goes up in uncertain times.

However, whatever you buy, at the end of the day you are placing a bet on your view of the future. If that view turns out to be correct, you will do well, if not, you will either do badly, or at least miss out on opportunities.
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The only sure bet, at this point, is real estate. It is a buyer's market. Prices are mostly bottomed out. Those prices will go back up. If you're a serious investor with money to spend then there's no reason not to invest in real estate. Your dollar will go very far there, and in a few years will have a very strong return when the market recovers.
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