When to invest?

Conventional wisdom says, "Buy low, sell high," and I have been content to do just that. As the stock market has slid repeatedly since fall of 2008, I have thought that, despite everything, I have time and the market will turn around before I am ready to cash out. So, a few weeks ago as the DOW hovered around 8500, I upped my 401K contribution. Buy cheap! But lately I have started to look my ignorance in the face. Sure, it's nice to buy low, but what happens to stocks that I own when businesses go bust? What happens to stocks that I own when they change status from blue chip to penny stocks? Or, more darkly, what happens to my nest egg if the whole thing implodes? Considering my misgivings about our collective return to the roaring 90s or the go-go 2000s, is there any wisdom in investing at all? 

Don't get me wrong, I am not one of the buy-gold-now! types, and generally speaking I am confident that after we have bled the system of its poison (bad debt, toxic mortgages, etc.) things will turn around. My hope is that the turmoil of the next few years will be, if not a positive experience (especially taken individually), for our collective betterment. We need to slow down and find value in the myriad things that cannot be purchased--I believe that our survival depends on this. That said, I am a frugal fellow and the idea of tossing my hard-earned shekels down a rat-hole makes me queasy. So, any ideas? Continue to invest? Stop investing in stocks and buy wines (actually a bad investment for me, I like wine too much) or spend my investment dollars on all manner of immediate gratification?