Business improves, interest rates stay low, and stocks continue to rise. At this point, the average market-timing investor starts to buy again. No one blows a whistle when each period ends, and the periods usually aren't as neat as I've pictured them here. What's more, we haven't had a classic declining market, in the major indexes. At this writing, however, they're both down only 7 percent from where they opened last January.
Individual stocks are another matter.
Many value stocks got creamed last year and early this year, while growth stocks soared. Since the tech bubble broke last spring, growth stocks have stumbled while value stocks have gained. If you owned the wrong stocks at the wrong time, you're feeling bad. For example, take Lucent Technologies. It had been a fabulous ride.