Is it time to get back in the stock market?

Depends on your time horizon. The stock market is at an eleven-year old low (7114.78 as I write). Because Obama plans to raise taxes on capital gains and dividends, this make stocks worth less. Obama will be in office for four to eight years. Right now the interest rates you get at the bank are very low. But the real question is where interest rates will go in the further. If interests rates increase significantly, the cost of capital increases, further putting pressure on stocks. Plus, people will move away from stocks to bank deposits (if there is anyone left to move). A few companies will fail, others will be created. But if the national government nationalizes companies, wiping out shareholder value, then other "crucial" companies are also at risk at being taken over.

Is the stock market undervalued? Has it already taken account of all the failed companies and future nationalizations? Will the business cycle go upwards in the near term? Will the increase in stock prices outpaced the return from banks?

In truth, I don't know. Massive spending by the government, the upcoming baby-boom retirement will put tremendous strains on borrowing. I expect interest rates to increase over the next few years. Inflation may also rise rapidly.

For myself, I do a little dollar-cost averaging in index funds. But I have a time horizon of 20 years, i.e. I do not expect to have to sell stocks until then. I expect the market to recover to its previous highs in that amount of time. Therefore, current stock values may be a bargain. Unfortunately we cannot depend on recent history to predict the future. The President and Democratic controlled Congress are changing the rules. Hopefully, the worst case scenarios wont last more than six years. People are fearful, and therefore are avoiding the stock market. Stocks are therefore a lot cheaper.

So, in conclusion, if you believe in the vitality of the U.S.economy and have at least a ten year time horizon, I think yes it is a good time to invest in the stock market. Buy low - sell high. But buy only if you can afford (financially and mentally) to leave it in for a long time.