Is it time to start buying stocks again?

According to Ned Davis Research, the average bear market since 1960 has lasted about 14 months resulting in an average 31% decline for U.S. stocks before a bottom finally formed. The mildest bear market saw the Dow decline 21% in 1990 and the worst bear market resulted in a 45% plunge from 1973 to 1974.

This bear market, unlike the last one from 2000 to 2002, was triggered by the sub-prime credit crisis, a bust in real estate and compounded by soaring energy and food prices. The last bear, a first-class tech-wreck, which ended in October 2002, saw the S&P 500 Index crash a cumulative 41% and the Dow a dizzy 38%.

The good news is that bull markets or big rallies follow bear markets resulting in significant double-digit gains for investors. But the key is to avoid losing money, or least getting smashed amid a bear market so that an investor can recover quickly and begin compounding again once the primary trend changes.

In 2008, only commodities, some foreign currencies and Treasury bills have worked to protect portfolio while stocks, including emerging markets and most fixed-income securities have declined.

Ned Davis Research points to an average 31.8% gain for U.S. stocks 12 months following the conclusion of a bear market dating back to 1960. And before peaking last fall, the S&P 500 Index gained a cumulative 105% from its bear market low in the fall of 2002.

From its peak last October, the Dow and the S&P 500 Index have now declined a cumulative 19% heading into Monday’s trading. If history is correct, this suggests that stocks still have another 12% or so of losses ahead before forming a bottom. That means more pain lies ahead for investors in stocks.

But there is light at the end of this dark tunnel. I’m finding a plethora of bargains worldwide right now – including big dividend-paying stocks like General Electric (NYSE-GE) that now yield 4.7% and trade at a multi-year low. Many other large-caps trade at similar levels. Though stocks might have been fairly valued heading into this crisis last summer, the damage thus far has taken every sector of the global market – except basic materials and energy – to very attractive levels.

This bear market will end – eventually. The first step to the next bull market is sharply lower oil prices. Until energy prices retreat, stocks will continue to suffer losses.