No bottom to stock market clearly in sight

The magnitude of this decline is close to that of the dot-com collapse earlier this decade, but this time, it's not just retirement accounts and stock portfolios that are being hurt. Increasingly, the availability of loans and credit is drying up, too.

Rob Arnott, chairman of Research Affiliates LLC in Newport Beach, Calif., thinks the big difference this time is that Americans are feeling increasing pain apart from the stock market.

"People in 2000-02 saw their 401(k)s become 201(k)s, but the impact on their personal lives otherwise was minimal," he said. "This time, it is starting to be significant. People who have home equity lines and use them to pay for holidays or buy a car are finding that their loan facilities are getting pulled. That affects the way they look at their own spending."

He predicts another six to nine months for this bear market.

Some are far more pessimistic.

Jim Cramer, the normally bullish host of CNBC's "Mad Money" program, caused a stir Monday when he warned investors to take whatever money they need for the next five years out of the market now. On Tuesday, he called it "the most horrible market that I've ever seen."

Money manager Peter Schiff, who has long espoused the bleakest of market views, said the Dow has a good chance to sink to 7,500 or lower. He expects the bear market to last another five years or more. That would signal a possible loss of at least 20 percent more in shareholder value.

"Everybody wants to think there's a government solution to spare us the pain," said Schiff, who runs the investment firm Euro Pacific Capital Inc. in Darien, Conn. "There is no government solution. All there is is more pain."

One wild card is that a recession — unofficially defined as a decline in the gross domestic product for two or more consecutive quarters — could seriously crimp consumer spending, which accounts for two-thirds of U.S. economic activity.

Without that money flowing into the economy, a rally in stocks may be unlikely.

Once the bear market ends, investors could still have a long wait to recover their losses. After a stock market index falls 33 percent, it has to rise 50 percent just to get back to where it started.

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It took 12 1/2 years for the S&P to recover its losses from the devastating three-year period ending in 1932, and four years for it to make up all of the decline from the 2000-02 market plunge.

Still, the tumbling price of stocks has also raised potential long-term buying opportunities.

Dan Seiver, a finance professor at San Diego State University, said many stocks are now cheap by fundamental evaluation methods. Investor panic, he said, is a sign the bear market may be closer to the end than the beginning.

"The only time you get cheap stocks is when the world looks awful," he said. "Nobody's going to give you cheap stocks when everything looks good."

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