So you are in the market for the long haul. You can almost forget about it. According to Professor Elroy Dimson of the London Business School, there is only a 50% chance of ever going back up to the 2007 highs, and that would take at least nine years.

Dimson also says forget about the common belief that good times always follow bad times. Following the worst years in the market, stocks outperformed cash by 7.1% to 6.8%, a virtual dead heat.

This next one really hurts: If you believe that stocks become riskless if you hold on to them long enough, forget about it. It simply doesn't work. We've have four global bear markets since 1900 in which averages have fallen at least 40%. The risk is that by holding on, your investment may come back, but it can also wipe you out along the way.

There is a theory of investing that says you must diversify. What does that mean? Quite simply it means that, in the overall, some stocks will rise and some will fall, but hopefully there will be more winners than losers and you will make money.

Some mutual funds have taken this to the extreme. For example, there is a Total Stock Market Index Fund that includes more than 3,000 stocks. This is stretching the limits of diversification.

So does it work? First we must keep in mind that most mutual funds are not short sellers. Selling short is the practice of selling a stock first and then replacing it at a lower price. In other words, you are betting that the stock price will go down. There are some so-called Ultra-short Index Funds, but generally they are not widely used. Hedge funds do trade the short side of the market and are able to profit when we have a bear market like the one in 2008.

Now let's look back at 2008. Stocks across the board fell an average of 40%, with some falling as much as 90%. The fundamental flaw in these diversification theories of investing is that they work well in bull markets like we've seen up to 2007. When a bear market hits the fan, all bets are off and investors are blindsided and suffer enormous losses. Even the highly diversified Vanguard Total Stock Market idx (VTSMX) fell 37% during the past year.

So what to do? Over the years, I've followed a simple rule: "When in doubt, don't." When you don't "feel" right about the market or a particular stock, stand aside.

There are times over the past few years that we have heard the bull is back, then the market is turning bearish, then it's a Goldilocks market -- not too hot, not to cold -- just right. What the heck is going on... absolutely nothing! And at the same time we are also told we are entering periods of potential earth shattering events!

If we made a list of all the reasons for negative sentiment in the market it would be a long one. Interest rates have been rising consistently for several years. The housing market is cooling off (I'm not a bubble believer). Our trade deficit and national debt have been rising unabated. The dollar has been weak. We are at war in Iraq and in conflict with a half dozen countries, the scariest being Iran. Some of our "allies" set new records for backstabbing and limp support of what should be our common interests. Israel/Lebanon are again in direct conflict. Hurricanes hit hard and global warming has become a hot topic (sorry, couldn't resist). And did I mention what seems like the staggering prices for fuel and basic commodities like steel, and concrete and, and... that's enough. You would think on the surface of it this would be enough to sink the market. However, give or take a few percentage points the stock market seems to be OK.