We watched the market implode last week.

Some were scared, some were exhilarated. Some could only watch.

When the market closed flat Friday after a tough Thursday, in which more than a trillion dollars of investor wealth was wiped away, I think pretty much everyone was pretty glad to see the week come to an end.

It didn’t last long. It was only a matter of hours before you saw everyone watching cable news, looking at their iPad or checking their phone to read about the downgrade of U.S. debt by Standard & Poor’s. When the markets opened on Monday, they quickly fell into the negative. The market staged a number of brief rallies, but the trend line for the day was unmistakable as the masses moved out of the markets.

Last Thursday, I advised subscribers of my Game-Changing Stocks and Fast-Track Millionaire newsletters to buy the S&P.

Today, I got an email from a college buddy of mine. He’s the smartest guy I know. He said he was glad he had not followed my recommendation. I will tell you what I told him:

There is still time.

The earnings multiple of the S&P is 12.6. It hasn’t been that low since March 2009.

And 90 trading days after it hit that ebb, the market rebounded to nearly 19, then to 20 and then to 21 and beyond, where it held.

To put it another way, investors who bought the S&P during the last dropoff of this magnitude cleared 55% gains in less than a year. And those who bought at the ebb, a few weeks earlier when the markets fell to just above 10 times earnings, notched a triple digit gain in less than six months.

Are you still sitting there?

Why haven’t you gotten busy and bought the S&P already? It’s easy to accomplish with an exchange-traded fund (ETF) such as the SPDR S&P 500 ETF Trust (NYSE: SPY). It mirrors the index, and right now it has more upside than anything else in the market.

What about the stocks you hold? Unless you have a deep conviction about their future prospects, you should seriously think about liquidating positions in your portfolio to buy the index. There will always be downside risk, but my conviction at this point is that today was the day for the market to take its lumps on the U.S. downgrade. If the stocks you hold are winners, then this is especially true. If you’ve managed to generate some alpha, then you have to ask yourself whether the stock you are sitting on has the potential to double in value.

Because the S&P not only has the potential to double in value, it has done so before in very similar circumstances.

Don’t let anyone tell you about “the new normal.” Anyone who uses such phrasing also probably tried to sell stocks to investors by hyping the “new economy.” The most dangerous words any investor can say are “This time it’s going to be different.” The reality of the market — or any system of random outcomes — is this: The results always regress to the mean. And the mean, in this case, is about 20 times earnings. That’s the average since 1990. Even if you don’t buy that, consider: The average just for the past five years is 16.3. That’s 30% upside.

Listen to me:

The long-term average annual return of the S&P 500 is only about 10%. You have the opportunity now to buy three years worth of results in 90 trading days, with the potential for a decade’s worth of returns.

There is a downside. The market could fall to 10 times earnings. It has before, and it has done so in recent memory. But you don’t have to buy every bottom and sell every top to be a successful investor. And each time it has dropped below 10 it has rebounded — quickly. There’s just too much value to these companies. The bargains aren’t going to last long…

If you’ve been unsure of what to do with your investments, then this is the perfect opportunity to hit ‘reset’ on your portfolio and to line it up for some standout gains. The play now — if history is to be our guide, and it has to be (it’s the only one we have) — is to buy. 

I keep 20% of my portfolio in aggressive, high-growth picks — the sort of stocks I cover in my Fast-Track Millionaire newsletter.

Action to Take –> Last Thursday, I personally moved nearly all the available resources in my brokerage account into SPY, as well as all of the cash in my self-directed IRA. At this point, I have only two other equity positions remaining: Altria (NYSE: MO), which I will let ride, and Annaly Capital (NYSE: NLY), one of the best dividend payers I’ve ever found. If the market is down at 3 p.m. Tuesday, Aug.9, I will liquidate Annaly and invest the proceeds immediately in SPY. My money is where my mouth is. I’ve just seen the cycle come and go too many times to ignore the potential. As I told my college buddy, there’s still time. That’s true for him and it’s true for you, too.

Best of luck as you navigate the market.

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