I am very hopeful the stock market will quickly rebound “as it always does,” and that the euphoria will resume “because it’s different this time.” But it doesn’t feel that way. (Of course, it never does when the market’s fallen sharply.) In the old days, long bull markets were followed by not-brief bear markets. And long economic booms were followed by recessions.

Every seasoned investor knows that “it’s different this time” are the four most dangerous words in the English language, but you may have seen one brokerage firm’s current TV ads actually concluding: “It is different this time.” And maybe it is.

Yes, we’re the world’s only superpower, which takes away some of the uncertainty, and gives the world something of a leg up for “stability” — always a good thing for financial markets. It also means our defense budget can remain at a relatively low percentage of our GNP compared to its decades-long Cold War level. That frees up perhaps 3% of our GNP for more productive pursuits (i.e., devoting more like 3% than of 6% of our GDP to defense). In that sense, “it’s different this time.”

But how many superpowers rivaled our strength between World War I and World War II (none, I think), and how good was our economy, with its relatively low defense expenditures, then? (I’m no historian, so if I’m off base on this, let me know.)

And, yes, the breakthroughs in technology are beyond dazzling. But it’s possible to wonder just how profits will be squeezed out of all this to enrich investors. Price competition, which is terrific for consumers and efficiency, is tough on profits. What will be the model by which you and I finally pay for all this wonderful Internet stuff we enjoy? Where will the profits come from to support all the players and justify even today’s stock prices?

(There was a time in the last century — like, say, four years ago — that 10,000 on the Dow would have seemed more a fantasy than a floor.)

I truly don’t know what will happen, and I am immensely optimistic about the decades to come. I may never be able to make myself invisible or fly like Superman — next to immortality, the top of my wish list — but short of that, almost anything now seems possible.

But that doesn’t mean Goldman Sachs guru Abby Joseph Cohen is correct in predicting we’ll soon be back to record highs. Then again, the last time I doubted her, on “Face the Nation,” I was wrong and she was right.

I recognize that I’m not giving you much guidance here. But I do know that the sorts of valuations that peaked in April, and that I have been making fun of for some time, were absurdly high. And I also know that the stock market tends sooner or later to go to both extremes, and that we are nowhere near absurdly low prices and despair. (Not that the bearish extreme is necessarily the next stop on the market’s journey, though it might be.)

So you still shouldn’t mess with margin. You should still pay off your car loan and credit cards before investing a dime in stocks. You should still search for value, if you choose stocks yourself, or else continue your steady program of investing a regular amount every month in two or three carefully chosen, no-load, low expense mutual funds. (Index funds are usually best.) The further the market tanks, the better you can feel about buying new shares “on sale.” And if it snaps back to old highs, better still. Either way — especially if you are young enough to have time on your side — you can find a reason to be pleased.

Monday: Which Candidate Can You Really Trust? (I Read Bill Bennett; Now — Fair’s Fair — You Gotta Read This)



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