The worst is NOT yet to come, but things aren't going to turn around anytime soon.
The reason why the worst is not yet to come is because the massive amount of leverage in the system has come WAY down, and that was the number one reason things got as bad as they did.
But here is the downside.
Underemployment rate is still ~20% and I don't see where the job growth is going to come from. We need to change from a service-oriented economy to a producer again. That will take a generation to complete. We also need to stop offshoring IT and Manufacturing. Right there, we would have a million+ Americans employed.
Health Care and SS is going to crush us, but this is an issue that has been around for a decade or longer.
The dollar, though strong today because of what's going on in Europe, long term, has big issues with all the money printing.
The DOW and S&P are up, but there is no such thing as a jobless recovery. Its smoke and mirrors right now..
Housing prices should go up with inflation... assuming the home is kept up to date and is as structurally sound as the day it was built. There is no reason for home prices to appreciate (speaking broadly here) more then CPI. I'm not talking about home prices in areas that become more desirable for some reason. This is good... it will lead to people not levering up their assets as much as before.
If the government can limit offshoring, create sound financial regulation, and solve the health care and social security issues, the rest will take care of itself.
Unfortunately, I don't have faith in our government, near term. Obama can't get anything meaningful done. He's not the problem, though... the Senate and Congress are the problem.
I see the DOW (since Flagpole, that is your favorite measuring stick... even if it is a flawed one), fluctuating between 8500 and 12000. It won't surprise me to see one or the other... so I guess I'm like Loholloran on that one.
Bottom line, I feel most comfortable in cash, hard assets, and speculating in individual stocks that add value to every day lives (like Apple, for example).