Am I willing to accept that my investments will lose 90% value?
No, I'm not, but then, I don't believe the market was as significantly over-valued in September 2008 as it was in September 1929. I also believe the financial instruments in September 2008 were far more complex than in 1929, and that the impact of global trade was (is) far more extensive now than in the past -- in terms of the impact we have on each other.
The exchange of information in 2009 is far greater than in 1929, fueling panic and idle speculation that also taps into our emotions.
After every depression (recession, slowdown, minor aberration, distraction, great hiccup, or whatever you would like to call it), there has been a rally in the stock market. I won't suggest one needs to be fully invested to see the benefits of positive growth in the markets, but one does need to believe that the businesses that provide jobs, create new products/services/technologies, and pay taxes have some intrinsic value to the economy.
The US is 25% of the world's gross domestic product (in 2008), and one of our states is the eighth largest economy in the world (in 2008). Winston Churchill said, "When America sneezes, the world gets a cold." The US was the the center of the 1929 depression and it's lack of financial controls (then and now) have caused everyone in the world to suffer a cold. But just because the world has a cold doesn't mean each country is in teh exact same state of health -- some are healing faster than others (unfortunately, it's not us -- but Canada's economy is more stable right now, as an example).
When comparing 2009 to 1929, one needs to consider something other than the financial technical analysis. The period after 1929 to 1941 was one where there was significant technical development: from grainy motion pictures with subtitles to talking motion pictures, exploration of the world using new technology (the airplane), a great flowering of literature, spreading of culture using the airwaves (radio), increasing movement between the states (Henry Ford's automated assembly line). None of that was dependent on measuring the daily gyrations of the Dow Jones Industrials. All of it, however, was based on people trying to earn a living.
So is it different this time? Nope -- same song, second verse.
-- Rita