And it would be folly to try to guess which companies will be bought with mergers and acquisitions (m&a) money. That's a fool's game. Buying a stock because it might be bought out by another firm isn't investing, it's gambling. In that vein, if investors want to play, then they need to buy several possible candidates, not just one, and hope for the best. Too often, deals are announced and never consummated, especially in this environment. There are too many slips 'tween cups and lips on buyouts for most investors to feel comfortable. Leave the arbitrage in m&a deals and guessing which companies will be bought to the pros. Even they get burned, but they have lots more money to play with.

While mutual funds dedicated to stocks are always in the market, they don't have to be fully invested if managers don't feel the timing is right. Many funds saw huge redemptions at the end of last year, requiring large sales of stock to meet cash demands. Managers are loathe to repeat that nightmare, and many are sitting on unusual amounts of cash, hoping the redemptions stop and performance improves. When mutual funds are fully invested (not with all their cash...they always keep some out for redemptions), individual investors will jump in as well.

What will make institutions, the big money at insurance companies and bank trust departments as well as mutual funds, get back in the market? Earnings. Plain and simple. They're waiting to see earnings, earnings earned from ongoing business, not earnings from acquisitions or tax carry forwards or extraordinary events like the sale of a division. Not all profits are equal in the eyes of investors. They want to see a company growing from the core business. When that's happening, investors will gladly buy stocks again.

But if you wait until earnings show, won't you miss out on the biggest moves? Most likely, yes. If a stock is selling for less than a dollar now and starts to move up in anticipation of earnings, it could go to $2 or $3 a share before earnings arrive. That's great. Investors willing to take the risk of those earnings not appearing have been rewarded. That doesn't mean there isn't plenty of room left for the stock to continue moving higher.

If a company has finally turned the corner (think of homebuilders or autos) and is reporting solid earnings (from the core business), it will most likely continue to grow, selling more of what it makes, creating more earnings. Just as bad things only got worse as the recession crashed upon us, when good things start to happen, more good things will most likely be added as the economy recovers and moves ahead. That's what happened after every other recession the U.S. has had.

Sure, you'll miss the high multiples of returns that come from taking a position before earnings come out. But you'll also miss the devastation if those anticipated earnings are reported as losses. No stock goes down faster than one where expected earnings don't appear. Better to miss the first upward moves than to participate in the large downward ones. There's still plenty of money to be made once a company leaves the land of losses and enters the land of profits. You may not make as much, but you certainly have better odds of making something.

Don't be too quick to get fully invested in this market, even after the recent rally. We haven't seen the money yet.

Ted Allrich is the founder of The Online Investor and Allrich Investment Management LLC. He is also the author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.