Want to try and catch a falling knife?

Less than four months ago, I moved my retirement money into fixed-income and bond funds (50% each into F and G funds equivalents) and also emailed out the following message to some friends and collegues:  

"The risk of a stock market correction occurring during this summer is still rather high.  Although still riskier than the "G" TSP fund, Bond/Fixed Income funds might do well during the next 90 days, so you may want to move some percentage of your account into the TSP "F" fund, while still keeping most of your money in the "G" fund during this summer.  The time to buy back into stock funds will be after the correction occurs, probably later this summer or early fall."

From the time I sent out that email on May 23^rd until yesterday (Sept 8^th), the stock market has entered a correction/mini-crash and the performance of various TSP funds has been:

  G Fund = a gain of 0.73%

  F Fund = a gain of 3.90%

  C Fund = LOSS of -9.42%

  S Fund = LOSS of -12.93%

  I Fund = LOSS of -12.84%

Percentage Profit/Loss of various TSP funds since May 23rd.  Fixed-income (F) and U.S. Government debt (G) funds are the only two funds that have not lost money since May.

One person had asked me in May what my reasons were, and I replied with the following (which I believed would benefit bonds & corporate debt funds like the TSP F fund):
     Reason 1.  Probable slowing economy
     Reason 2.  Probable European banking crisis
     Reason 3.  Possible Congressional budget crisis
There were also some minor technical reasons why I thought the correction was going to occur very soon, but the above were the main fundamental reasons why I thought the risk/reward ratio had turned sour for stock index funds. 

But now that stocks have dropped by about 10% - 20%, the question everyone is wondering is, "Do we get back into stock index funds now?"  I know that some investors have started to get back in, but I've learned through painful experience to patiently wait for more confirmation.  Back in the days when I was working at a private hedge fund, something that I repeatedly had drilled into me was that is was a bad idea to try to catch a falling knife.  And it's an *especially* bad idea to try to catch a falling knife when it's raining knives all over the place.  That's the situation we still have now, because all three reasons that I gave on May 23^rd are still valid today (although reason #3 has been delayed until November, pending the outcome of a Congressional budget "super committee.")

Additionally, we now have the "usual" threats to the stock market for this time of the year, such as the threat of a war between Israel and Iran, or a "9/11 anniversary" terrorist attack, etc.  Put these risks all together, and you have a risk "rain shower" of falling knives with a low probability of being able to catch a knife without getting hurt by one of the other knives falling all around you.  Sure, it's possible to successfully catch a falling knife sometimes, but it's a lot more difficult to do when it's raining knives everywhere.  I tend to be more cautious and protective with money that's in a retirement account than in a speculative trading account.  So I'm not going to stick my hand out there just yet.  But you can go ahead and try if you like.  But be careful.  You might decide that it wasn't worthwhile the first time you get your hand cut off and are forced to drive to the hospital.  Hopefully, your car is an automatic.  Sticks are hard to drive with one hand cut off.    :-)