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the market is currently trading about where it ought to be

I don't think that is true. Look at the dividend yield of some of the strongest companies these days. For example, Bank of America is paying around 8.6% in dividends. They said they didn't need any bailout money, thank you very much, but were asked to take it anyway just so the other guys wouldn't be embarassed!

Now why would the value of their stock be "fairly priced" with that kind of income generation? Especially considering they just bought Wachovia, their future income stream will be even higher than when they were just paying a dividend yield about 1/3 of that a year ago!

Or how about Apollo Investment: A couple of months ago their price was around $16/share and they were paying $2.08/share in dividends per year. (They are one of those tax-exempt investment companies that has to pay at least 90% of their income in dividends.) Yesterday their stock price slipped under $6/share, but their next dividend payment scheduled for December is unchanged at $0.52/share. (They have no exposure to sub-prime home loans, and there is no information out there that suggests their income stream will decline.) This represents a yield of over 34% per year! Obviously, the stocks of many strong companies are being valued as if they have no future value at all.

When Bank of America stock reaches a price yielding under 3% and Apollo reaches a price yielding under 13%, then I will agree that the market is fairly priced. For now, prices reflect total panic.