Here's an article some of you would really benifit from reading...
Current Crisis Could Set The Stage for Future Gains - WSJ.com
Here is a tease...
...Suffice it to say that the causes of the current credit crisis are rooted in the continuing collapse of the real-estate bubble, which has proven to have far wider ramifications than the collapse of the tech bubble that began in 2000. A big difference is leverage. Most real-estate purchases are leveraged, with the mortgage debt repackaged and distributed to investors. Most tech stocks weren't bought on margin, and when they were, it was up to 50% of a stock's value, not the 100%-plus that became common in the real-estate boom. Leverage magnifies losses. Now we're seeing the consequences of a massive deleveraging.
...So far, however, this is a financial crisis, as opposed to a broader economic crisis.
...No crisis is exactly like a past one, but the current real-estate and credit crises most closely resemble the savings-and-loan crisis of the late 1980s and early 1990s. The overall economy proved remarkably resilient in the face of the failure of thousands of S&Ls as well as falling real-estate prices.
Recall that the crisis also required massive federal intervention in the form of the Resolution Trust Corp., which acquired the real estate, mortgages and other assets of the failed thrifts and disposed of them in an orderly fashion that helped put a floor on prices. Something like this may be necessary this time, too, now that the Treasury Department and the Federal Reserve have belatedly decided that the piecemeal propping up of wayward institutions is no way to restore confidence.
For investors, the good news is that a purely financial crisis can set the stage for strong future gains. Stocks rose moderately between 1990 and 1992 and rose robustly from 1992 to 1995. In the 1990s, the Dow Jones Industrial Average gained an average of 18% a year. Not that it will likely happen again -- the '90s encompassed most of the tech bubble -- but it does show that a financial crisis need not cast a pall over future returns.
These are long-term trends, none of which mean you should run out and buy (or sell) stocks. Despite Monday's 500-plus-point rout, we haven't yet reached another of the Common Sense buying thresholds, which is to buy on 10% dips (the next would be 2025 on the Nasdaq) and we aren't that far below the levels reached during the last wave of panic selling, which was in July.