I am with Unclemick concentrate on income. I have had half a dozen dividend increases this year vs one (my first ever) dividend cut. Now I've invested in some admitedly higher risk financial companies who may cut the dividends. So if the credit crisis to continues to deteriorate I maybe in trouble with some of these companies.
Still I am really not too concerned about the price of stocks only the earnings. The latest S&P earning estimate for the S&P 500 is $98.63for 2008. This gives an earnings yield of 7.6%% a number comfortably above a 4% SWR. As long as US companies earning keep up with inflation we should be fine. Even if this forecast is optimistic S&P earnings would have drop to about $52 to but the 4% SWR rate in serious risk.
I really think the secret to (pyschologically) surviving bear market is to stop viewing stocks or equity mutual funds as pieces of paper where you hope to buy them low and sell the to another sucker later at higher price.
That is gambling and if you aren't by nature a gambler you'll be miserable.
Instead treat stocks for what they actually are a claim on the future income stream of business. Whats important is; is the stream big enough to meet your expenses? I'm personally a fan of getting my money now (dividends) but trusting companies (in the aggregate) to reinvest their earning for future growth has also worked out well.
Wellesley has current yield of 4.63%, a big chunk of Wellesley, Vanguard Total Stock Market, a sprinkling of foreign stocks, a several years worth of expenses money markets, CDs and short term bonds you are fine.