An excellent report can be read HERE based on datamining the performance of stock return vs GDP growth for more than 100 years! The report is very long. I summarised below:

• as stock market is a leading indicator, the high stock market volatility in 2008 shows that 2009 will be a VERY severe economic downturn
• based on a regression model using 2008 stock returns, US' real GDP growth is -4% in 2009 which twice as deep as recessions in 1974 and 1982
• previous' year economic growth has zero correlation with the following year's stock return confirming that stock return is a leading indicator, not a lagging indicator
• high level of 2008 stock volatility does not offer any meaning insight to the return in 2009
• based on valuation (p/e) model verses stock return from 1881-2008, it is predicted that the US stock return will yield 8-10% average return for the next 10 years!

My own layman interpretation:

1. Stock return in 2009 is unknown, so don't throw all your eggs and your kitchen into the market;
2. Recession will be very very bad this year.
3. Long-terrm return for equities for the next 10 years will be super good! (according to the article).

Combining (1) and (3), it means do not invest lump sum but a RSP will be the better option.

I am quite worried for Singapore's economy. Despite the horrible things that is happening in the US, its real GDP growth is predicted to be just -4% using the above regression modeling and just -3.2% based on forecast (source: Economist) compared with Singapore's -8.8% (source: Economist). If things do get out of hand, I am not surprised that Singapore could lead to surged in crimes. Today's straits times, interviewed a researcher who predicted a surged in sucide rates too.