Should I pull out of the stock market & look for other investment options ?

Yes, you can stay invested and plug along. No, you shouldn't day-trade. But in my opinion, it pays to stay alert to major changes in the market. For example, your return, based on the Wilshire 5000 Index, was approximately the same (36-38%) whether you invested in March 2005, March 2006 or March 2007 and sold last Friday. You could accomplish in 3.5 months what took 2.5 years by buying at an opportune time -- the big sell-off a the end of February this year. Of course, some sell-offs last longer than others. More on this at www.extramayo.org.

The first objective of an investor is to protect capital. So if you have purchased risky stocks -- i.e., companies that might fold in a recession -- now is probably not the time to be holding them, or buying them.

The next consideration is opportunity cost. What does it cost you to hold stocks or stock funds during a long downturn? What else could you be invested in that would provide a positive return? What's the spread? Is it worth making the change?

We are headed into a market, I believe, where it will pay to be selective. If you're a great stock picker, good for you. If not, use mutual funds, but understand that most mutual funds will only outperform their benchmark in a down market by a modest amount. Or, invest in CDs or bonds or precious metals or some asset class other than equities. And after a while, of course, it will be time again to invest heavily in stocks.

A similar situation exists in real estate. Frankly, I'd wait until next year to get into that market because the pain levels will be much higher then. Mortgage resets in the first six months of 2008 will be double the volume this year. That will likely mean more distressed sellers.

Depends on how old you are and what your investments are in. If you have a long time (10, 20, 30 years?) It is better to keep buying in the weak market.

No, markets are cyclical. Many people think real estate is a horrible investment now but it's actually still a good one. Most investors are short term which is why they get paranoid. This in my opinion is a market correction not quite a recesssion yet but close. Long term investors are the millionaires and billionaires in this world. the short term investor is generally struggling because they don't know how to react to volatility. Stay the course and don't put all your eggs in one basket.

I would not completely pull out. Just make sure that you are diversified, with your holdings in many different sectors, and also make sure you have exposure to many different countries.

You do not want to have all your money in the US Dollar, since it is in a long-term bear market. Because of this, you may want to consider investing a small percentage of your funds into gold or silver.

No.

Simple Answer. It's great to see someone who realizes that "buy and hold" is very risky. The "Retirement Indicator" is
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