Average into stocks with good dividend that have clean (or semi clean) balance sheets flush with cash. That is buy 50% now and continue to buy as the price goes down (and thus % yield goes up).
For example GE. Although GE has a financial arm that should continue to see asset write downs the company has enough cash to get through a downturn. Parking your money with a company like GE will pay a ~6.4% yeild (better than cash) and will keep you in the game for an eventual rise in the markets.
Of course try to diversify across sectors into companies like GE. If you stay in cash your capital preservation will be good, as you may lose value buying into equities. However, you WILL miss the boat on any bullish cycles.
Just my $.02, this doesn't consitute financial or legal advice.
EDIT:
I have heard of strategies of shorting the VIX and if I had excess cash I would give this a try. However, I don't know how to go about this.
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Fishhead what is your market strategy the next six months?
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