Investors Take Heed: We May Not Have Hit Bottom Yet

By Nancy Trejos
Washington Post Staff Writer
Sunday, December 7, 2008

Not so fast.

Sure, stocks and real estate are looking cheap right now, but many investment advisers say they could get a whole lot cheaper. So unless you're willing to wait a long time-- maybe a very, very long time -- you're probably going to watch your investments tumble in value, they cautioned.

"Both the housing market and global stock markets will get worse before they get better," said Tom Lydon, president of Global Trends Investments in Newport Beach, Calif., and editor of ETFTrends.com.

Let's take the pessimistic argument on stocks first. In the long term, the stock market is driven by a stable economy. And the economy is far from stable. There are too many unknowns, advisers and strategists said.

We don't know how many more banks will fail.

We don't know what's going to happen to the auto industry.

We don't know how many more jobs will be lost.

We don't know how many people will declare bankruptcy.

And we don't know whether any of the federal government's bailout plans will work.

"These issues have to get to resolution before the market has a meaningful recovery besides the typical bear market bounce," said Matthew Tuttle, president of Tuttle Wealth Management in Stamford, Conn. "The market seems to have a habit of going down and it doesn't look like there's any kind of silver lining or rainbow on the horizon at this point."

In the short term, stocks are driven by institutional money from, for instance, pension funds and corporations, said Anthony Migyanka, managing partner of Mobile Money Minute in Dallas. "The institutional money has all but pulled out and has put it under their mattresses," he said.

For the average investor, it's hard to tell which companies are healthy enough to invest in. Companies are losing customers, laying off workers, closing down offices, all of which could reduce their market value, Migyanka said. And at least for now, they still can't borrow money to keep their operations going.


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