The smart money guy I am referring to took his money out of the stock market when 0bama sealed the nomination and put his money into money market funds.
He has gained 3% since then.
When I asked him the "jump back in target" he said the 600 point S&P.
I didn't get all the way out, just loaded up on defensive stocks, and such. I took one good (lucky?) flyer on a tech stock that stayed even over the course of the downturn. That helped some. I've moved my portfolio back to a more aggressive stance since roughly the 1st of the year.
I'm not smart enough to time the market. With my luck, the turnaround would be at S&P=614.25 instead of 600, and I'd miss the initial bounce.
There's a lot of money (like your friend's) sitting on the sidelines. I think that when this turns around (no idea when, may be tomorrow, may be 2011) the initial runup will be very, very big. And, since I've got a 20 or 30 year horizon, I've got the luxury of buying all the way down, then waiting.