The context was the S&P 500 and by extension investor's portfolios. "Come back" can be objective; 1565 on the S&P 500 which was the closing high in October 2007. "Come back" can be subjective; some portfolio level where the investor no longer feels his entire financial plan is upside down.
Anyone who is serious about giving up on stocks needs to realize the point in the cycle at which they have decided equities are not for them; after a 57% decline. Plenty of people were worried/emotional after a 30% decline so at down 57% I do not doubt the emotional toll taken on some participants. But the decision to give up is driven at least in part by emotion.
If after getting your hands around the emotion driving this you still want to give up then you probably need a game plan that involves selling a little bit at regular intervals as the market goes back up--whenever that might start.
This sort of approach would do a couple of things. One is that the stock market will continue to exist, it will continue to go up most of the time and occasionally go down a lot for some reason even if this one is worse and takes longer to start to meaningfully recover. So from the continue to exist camp a systematic sales process would allow recovering a little more than by selling it all now. It would also give you time to let any emotions go back down and maybe look at it a little more rationally.
On the Seeking Alpha version of yesterday's post a reader asked that if 2007 is 1929 then didn't it take until 1954 to get back to even implying, by his math, an average annual return of 3%. In that light why not change your allocation now. As I am in Hawaii I do not have my Stock Trader's Almanac. That disclaimed, this was my reply;
I don't think that (2007=1929). But if you do look at a stock trader's almanac at how huge some of the up years were during that decade, the biggest in the 20th century. Normal stock market behavior, and keep in mind this was exhibited in spades in the 30s, includes large retracements after huge declines. Not to say that we would not go back lower after a huge retracement but there will be a couple of these along the way at some point. Then would be the time to adjust IMO.
For what it is worth I do not think it is the end for stocks. The decline has been severe and there is no way to know how long it will take for this to end. I have opined along the way about magnitude and duration but I am pretty sure I never said that enduring this would be easy and I'm not sure where I would be mentally if I had not taken some sort of defensive action early so there is an element of easy for him to say in this but despite how "different" this event has been the fear is not different and I suspect the emotion that causes feel good rallies is not different either. Hopefully anyone hellbent on getting out can do so smartly but I am not part of the get out crowd.