SHOULD you INVEST in STOCK Market NOW? BUY STOCKS in 2009?

I have written two posts on a related topic. Best Stocks to buy in 2009 and How to Invest in a Recession. But in some sense both these posts assume that you want to invest in the stock market in 2009, and none of them addresses a more basic question: Should you invest in the Stock market in 2009? Is it a good idea to buy stocks now or should you wait until there are some signs of improvement? Isn't it a smarter idea to completely stay away from the stock market rather than finding investing strategies to invest in a recession?

Well, the answer depends on your assumptions about where the economy is going and what I present here is purely my own opinion based on what I have been reading in the news in the past couple of days. Here is the picture that seems unavoidable to me:

Global economy will continue its downfall throughout 2009. 2009 has seen a surge in massive job layoffs and the rising unemployment will deteriorate the economic condition further before things start improving. So at least until the end of 2009, there does not seem any improvement in sight.

If you have been reading the news and / or you agree with the above assumption: then the answer to the above question is simple. Do not invest in stocks until late 2009. Wait for about half a year. This is ofcourse assuming that your interest in the stock market is in long term investment. For traders like swing traders etc. there will be plenty of money making (and money losing !) opportunities provided by markets moving up and down. However for long term investors, it makes sense to stay away for a while.

Ofcourse if you have strong reasons to believe that the economy will magically improve in mid 2009, then NOW is the right time to buy. But as of now I do not see any convincing signs in favor of this overly optimistic assumption. Again the answer depends on your assumption. My earlier post How to Invest in a Recession is about a golden-mid, investing in a recession when you are not sure of any assumptions or do not want to make any.