I don't think anyone can tell you what to do. If you can't sleep at night, you need to lighten up on stocks until you feel comfortable. As has been pointed out, cash carries an inflation risk, so nothing is 100% safe. I look at last year's losses and ask myself what happens if 2009 is a repeat of 2008? I don't think it will be but I'm not expecting the big rebound some predict either. My current asset allocation says I should be buying stocks now but I'm not. I think the normal rules have been suspended by the markets so I'm sitting tight until I see some stability. I own equities and I own fixed income. When I look at the long term, my equities have very good potential for appreciation. But I could have said that about AIG, Lehman, or Citi a year ago. IOW, it's anybody's guess where we go in the next year. I'm still sleeping at night so I'll live with my asset allocation. I'm just trying to avoid CNBC and their screaming extremeists. If I need market analysis, I'm watching Bloomberg.