It's certainly been a difficult couple of weeks since the calendar turned to 2008 with the Dow index having fallen 9%, the S&P 500 index down 10% and the NASDAQ Composite down 12%. The fear on Wall Street, at least as implied by market action, suggests we are headed for an economic disaster. This simply is not the case.

Let's look at an example. IBM, following in Dupont and GE's footsteps, pre-reported a strong Q4 on Monday (a 24% increase in earnings per share over last year's Q4) and stocks rallied on the news. Remember that IBM sells deeply into the financial services industry, so a strong quarter in spite of the troubles in the banking sector should be seen as a good sign. Two, IBM is something of a bellwether of overall corporate spending. Again, a good sign.

So, what's the strategy here? Unless you want to try your hand at market-timing, which is a fool's errand, there isn't one. Here's why:

1. No one can tell where the bottom of a recession, or a stock market for that matter, will be.
2. The average recession lasts 11 months and generally occurs when stocks and/or interest rates are much higher than they have been in this cycle.
3. Yes, the Congress may come up with an attempt at a quick fix. While I don't think this will actually do anything short-term, it will help confidence.
4. Running to oil and gas, and maybe gold, is not necessarily a solution or a quick fix for your portfolio. A faltering economy or consumer could mean less demand for these commodities: Oil, which had a trade or two at the $100 per barrel level, is now trading below $90.
5. Cash looks great when everything else is falling, but it won't look so great the minute the markets turn around and you're stuck still earning a tiny yield, which, by the way, is going down as the Fed cuts rates.
6. REIT saw some great returns from 2000 through January 2007, and then over the past 11.5 months, they've lost almost one-third of the gains earned in the prior 7 years!
7. There's a short-term benefit to bonds, maybe, but with the 10-year yielding 3.6% or so, what's the return after taxes and inflation? When the stock market turns up—and it will turn up—a couple of decent days in the 2% range will more than make up for a year's interest on a 10-year Treasury.
8. Stocks are now officially on sale. Ever heard the expression "buy low and sell high?" This is "buy low" time.

Hang in there. And remember that you buy low and sell high, not the other way around.