The Dow is down 34.1% over the last year, 26.6% over the last six months, and 19.6% over the last month. Ostensibly, when the markets are down a buying situation should manifest, but only if there is an expectation of those markets going back up. The basic rule of investing, “buy low, sell high,” contains an implicit conditional assumption; that the secondary state (e.g. “high”) will occur at some time in the future (and I don’t mean your college roommate from Humboldt). Yet, the continued plummeting of the markets indicates that no one is really buying at all, no matter how low the market was yesterday. In fact, people are still selling, which runs antithetical to the very notion of “buy low, sell high”. People who seemingly bought high are now selling low. “Buy high, sell low” only works if you’re short selling, and actually not even then, literally.

For many medium-to-long term investors, the current market creates a paradox of inaction; a timidity to buy, coupled with an unwillingness to sell. No one wants to move out of a position they think may be artificially low (and prematurely realize losses) but no one quite has the chutzpah to throw money into a market that’s dropping like a bomb.

So where IS the bottom? It’s hard to tell. If you’ve got a 20+ year investment horizon, functionally, you’re probably in the bottom right now. If you’re going to buy a stock and hold it for thirty years, you could do worse than buying now. The smaller that horizon gets (e.g. the less long you’re willing to hold) the riskier your play becomes. Still, it’s hard to tell what a good buy would be in today’s climate, even if you’re not looking to move out of the position until retirement. A share of Berkshire Hathaway (BRK), down 14% this week, is about as close as you’re going to come to a sure-fire value (assuming you’ve got $118 thousand lying around).

Fundamentally, the issue of where the bottom lies boils down to whether you think we’re in a recession, or a depression. If you think this issue of the entire American financial system coming unravelled is just a little snafu, then you can confidently buy away. But if you’re afraid the ramifications of this disaster may be far, far worse… better keep your cash handy and hold on for a crash all the way to the bottom.