Congress may come up with a credible budget reduction plan in the weeks ahead. And, then again, it may not.

If Washington does succeed in reducing federal spending and/or increasing taxes by a sizable amount, short-term interest rates could drop a notch and the stock market could stage a temporary rally. Failure to come up with a tax plan could drive rates up and send stocks down.

With all this happening, the big question now for many people is: How can rational investment decisions be made in such an irrational, unpredictable environment?

The answer, say the pros, is that rational decisions can't be made -- so investors shouldn't even try to figure out what might happen. Instead, they should simply invest in money market funds and short-term government bonds, and leave the important, permanent decisions for another time.

"What the prudent investor is doing is waiting to see what happens," said David Bugen, head of Individual Asset Planning in Morristown, N.J.

Peter Grandich, who runs Affiliated Financial Management and who's been on target these past few months in predicting downturns in the financial markets, has more concise advice. "Punt," he said.

"Cash is king for the early 1990s," said Grandich. "There are going to be assets like real estate, businesses and stocks that will be marked down sharply from current levels." So now is not the time to venture into any long-term investment, he said.

While a budget accord could give the stock market a temporary lift, Wall Street won't have to look far for other things to worry about. The Middle East situation doesn't look like it will improve soon. The U.S. economy is only getting worse. And some experts are now predicting what many thought was unthinkable just weeks ago -- that the nation could suffer a long, painful recession instead of just a short one.

On top of all that bad news, foreign investors appear fed up with Washington's lack of action on the federal deficit, and they've been voting with their actions. The dollar is down sharply against most of the world's currencies, and foreigners have been pulling their money out of the United States.

With that happening, long-term interest rates -- the ones that affect most people -- are likely to remain high even if the Federal Reserve Board does decide to loosen its monetary policy on short-term rates.

Foreigners and Americans alike are also concerned with the stability of America's financial system, worrying that bad real estate loans could topple some of this country's best-known banks.

The bottom line is this: The stock market will be under nearly constant pressure in the months ahead, especially if the U.S. recession turns out to be a dandy. And bond prices could decline if foreign reluctance to invest here drives interest rates higher.

James W. Stratton, head of Stratton Management Co., said an investor these days should keep only about half of his or her investable assets in the stock market. And that's as low as Stratton would ever go. "I've never seen so many major issues up in the air at one time," he said.

Stratton said an investor should put 15 percent of assets in cash and 35 percent into bonds -- but only short-term and intermediate-term government bonds.

Today's environment warrants extra caution, said Stratton, who helps Shearson Lehman Brothers Inc. manage its equity accounts.

Even though he is still earmarking 50 percent of his portfolios to the equities market, Stratton would buy stocks only in economically safe industries such as oil and natural gas, drugs, electric utilities and telephone utilities.

Similar advice comes from Charles Clough, the chief investment strategist for Merrill Lynch & Co. While the only stocks he'd buy are those of electric and natural gas utility companies and natural gas producers themselves, Clough isn't against buying bonds with longer maturities.

"The best strategy might be to lock in seven- to 12-year, 9 percent rates on Treasury bonds," said Clough, who believes that the sharply reduced demand for credit by consumers and businesses will drag rates down even if the federal government doesn't curtail its borrowing. Rates on long bonds were approaching that level last week.

And even if rates on these long-term bonds don't eventually come down, they probably won't go up much in a recession. So Clough believes investors who tie up their money in long-term bonds won't be too disappointed.

Investment pros have other advice. Bill Carter of Carter Financial in Dallas, for instance, thinks investors should start practicing "dollar cost averaging" -- putting a set amount of money into the stock market at regular intervals as prices are falling. And still others are advocating the purchase of stocks in industries that typically handle recessions well.

But the most prevalent advice today is this: Procrastinate. Put off for tomorrow any decision you could be making today.

How long does a bear market last?

Marc Reinganum, director of the financial markets institute at the University of Iowa, said a bear market usually has a duration of three to four years.

Yet while stocks will decline over the long haul, it doesn't mean that prices will go down constantly. "From month to month and day to day, you will see fluctuations," he said.

And it's difficult, said Reinganum, to detect a bear market while you are in it. Usually you need a historical prospective before investors realize that the stock market was bitten by the bear. "Bear markets," said Reinganum, "are defined after the fact."

But are we in a bear market, I pressed? "When we look back on this, 1990 will be considered one of the bear market years," he said.

On Wall Street, a bear market is often defined as occurring when stock prices decline by 20 percent. Since the middle of July, the Dow Jones industrial average is off about 30 percent.

John Crudele is a columnist for the New York Post.