I don't know if it is apparent in my writing but there is a constant debate going on in my head. There are times, like in early October, where its not much of a debate as I was convinced that the market was a great risk/reward trade. I was scared shitless, but I knew what the right thing to do was. Currently, it is not as clear to me.
The bear case is quite simple. The bailout package is very unlikely to work in its current form because it requires trillions of dollars in funding from private investors. I don't believe they will get it. The EU will likely adjust the bailout package, but if history is a guide they will need to get hit over the head first.
The bull case is that even if this solution stops things from getting dramatically worse we should see a rally. We are entering the strongest part of the year with large investors underweight and underperforming. The recent pullback looks healthy in that it has caused much handwringing but not much damage was done.
I have decided to remain net long but am nowhere as long as I was in early October. The deciding factor in remaining long is the valuation of my longs. I am able to buy some great companies at very reasonable multiples of free cash flow, that have limited economic sensitivity.