After a miserable two and a quarter years with the S&P 500 index down 34% in the past nine quarters, and with WorldCom's scandal pushing the market below September 21 lows, many investors are about ready to throw in the towel.

In the past, it is exactly that moment of capitulation that has rung the bell for the next bull market. So, it is a crucial question for all investors as to whether to "buy" or belatedly "bail out". The US experienced an irrational bubble in the past five years of the last century with market valuations driven up to unjustifiable extremes. Then, in the last two years, euphoria turned to depression as the bubble burst. But there remain four key questions we need to answer before we can attempt to answer the "buy" or "bail" question. • Has nominal value returned to the market? • If we strip out creative accounting, can we still make the case that the market is fairly valued? • Given the unusual nature of this economic recovery, will the outlook for real corporate earnings support the market? • Is the weakness of the market itself endangering the economic recovery through the so-called "wealth effect"?