My premise is that actively managed funds allow the manager to spot opportunities and position their fund for the rebound.

After reading:
The key to surviving bear markets is capital preservation, concludes GMO's Grantham. You want to "live to fight another day. You may see amazingly cheap asset opportunities in the next couple of years as distressed pricing might become more commonplace. It would be nice to have the money to take advantage."

Leads me to my second point:
And the other premise is the Stock market is mostly controlled by funds, which are mostly retirement, that still have 4% to 10% added monthly due to 401K, pensions, ira, etc...  therefore inflows are still happening, regardless of the bear market.

The managers are sitting on cash, ready to scoop up cheap values, based on a 'bottom'..  Jumping in too early means decline in performance.  The fund managers are measured on performance, not in absolute terms but relative to their peers.  They have research staffs, fast computers, direct ties to the market floor, extensive models, hedges, basically an advantage over individual investors.

My conclusion:
I'm better leaving my money sit in the 'best of breed' funds that I have selected, than to pull out into a heavy cash position.  The managers of my funds have cash ready to pounce.  If I try and time the up-swing, I'll be late and miss most the gains, due to trying to spot a trend.  There will be many 'false' starts over the next few months, but they may be good incremental buys for the fund manager.

Did I wait too long in a declining market?  Perhaps, then when I look at last spring (2007) there was a big drop in March, then a big recovery by Q4. I lost big in March, by the end of the yr was very positive.  Will it happen this yr?  Yes, there will be a re-bound somewhere in the world.  Everybody on this planet is trying to make money, some will, some won't.  Sitting on the sidelines means a loss of capital, due to inflation.  My fund managers must earn their salary, or be fired..

Since my fortay is not the individual stocks across the globe, I'll stick with actively managed funds.