We're in the midst of a bear market, pessimism is at a peak, and investors are understandably worried.

It's no wonder the doomsayers are out in force.

Over and over, we keep hearing that "buy and hold is dead." After all, equities have been pretty much flat over the past decade, and formerly stalwart blue-chip stocks like GM (NYSE:GM), Citigroup (NYSE:C), and Bank of America (NYSE:BAC) have lost more than 80% of their value since the market peak in October 2007.

When television's talking heads suggest that buy and hold is dead, I ignore them. But when a famous and well-known investor suggests that people who place their faith in stocks may be the biggest suckers of all, well, I pay attention.

Checking for a pulse
A recent Daily Finance article quoted bond investor extraordinaire Bill Gross of PIMCO fame saying, "Things will never be the same." He added: "Stocks will be more of a subordinated income vehicle as opposed to a 'stocks for the long-run' growth vehicle."

Why? Gross argues that a mix of greed, excessive borrowing, and lax regulation got the economy into this mess. Given that truth, growth prospects are so low for companies right now that common stock investors just won't benefit.

But before you go dumping all your equity holdings in favor of stuffing your money under your mattress, take a minute to think about the situation as dispassionately and objectively as you can.

Reports of its death are greatly exaggerated
While Mr. Gross is certainly correct in identifying the incredible problems investors and our economy face right now, I think it's a bit premature to declare that equity investing is dead.

First of all, consider who benefits most from statements like this. That's right -- bond gurus just like Bill Gross. Don't managers of bear-market stock funds like to hype up the potential negativity of the market during downturns? I'm certainly not accusing Gross of talking down the market so he can make a profit, but he's not exactly an uninterested observer.

But more importantly, if it's true that buying stocks is a loser's game, that would logically lead to one of two equally improbable scenarios. Either the economy will remain so bad for years on end that stock prices will remain almost permanently depressed, or companies won't be able to grow more than the barest minimum, even when economic conditions improve. Somehow, that sounds a bit pessimistically farfetched!

If we look back at history, stocks have generally averaged about an annualized 10%. That's despite the Great Depression, despite decades-long sideways markets, despite the stagflation of the 1970s, and despite the tech bust.

In the short term, Gross may well be right. But that doesn't mean anything about the long term.

Past is not prologue
Whatever the market as a whole does over the next few years, some stocks will rise and some will fall -- just like always. The market's swift and rapid plunge simply means that valuations on excellent companies with great growth prospects are more attractive today than they have been in a long time.

Markets do rebound eventually after a crash, and most of that bounce back comes in the year or two following the market bottom -- the dark days when people aren't sure whether they want to be in the market or not. If you wait until everything looks safe, you'll have already missed out on most of the rebound.

If you really want to rebuild your wealth, you need to be in the market now. That may mean picking up some big-name players in the insurance industry, such as MetLife (NYSE:MET) or Aflac (NYSE:AFL), as superstar money manager Ken Heebner has done lately. Or, perhaps like the management team over at Dodge & Cox (DODGX), you want to place a bet on health care and stock up on names like Amgen (NASDAQ:AMGN) and Sanofi-Aventis (NYSE:SNY).

Whatever your favorite sector, you should look for firms that are niche leaders in their industry, with reasonably strong product lines and a healthy financial position. Companies with strong balance sheets and reliable internal cash flows will be some of the biggest winners in the coming years, so start stocking up now.

Not dead yet
While our economy undoubtedly faces further hurdles on its path to recovery, I'm going to take a more positive stance than Bill Gross. Equities have been declared dead many times -- and so far, they've always managed to struggle back to life and go on to new highs. I'm betting they will this time, too.

Of course, it's a scary investing world out there right now. If you're feeling a bit lost about picking up the pieces and getting back in the game, carefully selected mutual funds -- ones with long-term, successful managers -- could be some of your best friends right now.

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Amanda Kish heads up the Fool's Champion Funds newsletter service. At the time of publication, she did not own any of the companies mentioned herein. Aflac is a Motley Fool Stock Advisor recommendation. Click here to find out more about the Fool's disclosure policy.