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The pummeling that has infected every corner of the global equity market this year may or may not be near its end, but thoughts of brighter days are inspiring pundits and traders alike. It may be fleeting, of course, like so many rallies before it this year that soon faded. But for the moment, hope springs anew.

The reported stimulus behind the pop in foreign markets today is, well, the prospect of more stimulus. President-elect Obama worked the talk shows over the weekend, promising to spare no effort in propping up, bailing out and rebuilding once he takes up residence in the White House. Like-minded statements from governments around the world recently are helping nurture the idea that more stimulus efforts are coming.

It's anyone's guess if this is the catalyst to unleash a sustained rally. Certainly the global combination of enticing equity valuations, battered prices, cheap money and pledges of state spending are turning heads. Timing is always in doubt, but with so much red ink in stock markets everywhere, Mr. Market is now discounting a fair amount of pain, as our table below suggests.

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The great unknown is the global economy in 2009. More to the point, are equities now sufficiently discounted for what awaits next year? Perhaps, although the answer will only arrive in daily doses. The future, in short, is still as unclear as ever, and perhaps a bit more than usual. Indeed, the recession in the U.S. is still in its early stages.

Nonetheless, strategic-minded investors with high levels of cash should be slowly, methodically putting that money to work in equities and other asset classes that have taken it on the chin. It's still too early to bet the farm that the rebound has arrived. Yet the hour is also getting late for favoring excessive amounts of cash and ignoring everything else.

Across-the-board losses — even deep ones — don't automatically spawn bull markets, of course. For all we know, the pain could run clear through 2009 and beyond. That said, the argument for some modest reallocating / rebalancing allocations from cash to risk is compelling. For our money, this is a process that should continue over time, and so strategic-minded investors must pace themselves, and their redeployments.

Yes, one can always rationalize that it's best to wait for even better deals. But if you can't at least begin to nibble at the relative bargains now, what makes you think that you'll have the discipline to do it next year? Or the year after that?

Successful investing over the long haul entails psychological and analytical battles. The former, by far, is the greater challenge. Markets sometimes offer bargains, sometimes not. The critical variable is deciding how to react prudently given current conditions. Easy to say, tough to implement. But in the end, it really does come down to: Buy low, sell high. The devil, as always, is in the details, but this is still the core of investment success. But as history reminds, few will be able to capitalize on this iron law of money management.

Source: Hope Springs Anew