CHICAGO - THE bear market that is ravaging investor portfolios is now one of the worst in modern US history and has wiped out more than US$7 trillion (S$10.3 trillion) in shareholder value, with no bottom clearly in sight.
When it stops and how far it drops, no one can predict with any accuracy - a painful uncertainty underscored by Wall Street's giddy mood at the moment the steep descent began.
A year ago on Thursday, Wall Street was celebrating the fifth anniversary of a bull market that had created US$10 trillion in shareholder wealth since 2002.
The Dow Jones industrial average and the Standard & Poor's 500 index hit all-time highs on October 9, 2007.
A headline in USA Today captured the prevailing sentiment: 'Market's run could keep going for a while.'
In fact, the party was over. The subprime mortgage problem that was laid bare by a decline in home values developed into a much broader credit crisis that toppled giant banks and financial institutions.
Panicked investors have been fleeing from stocks. The S&P is down 37 per cent from its peak of 1,565 a year ago, closing at 985 on Wednesday, and the Dow has tumbled 35 per cent from 14,164 to 9,258.
Most experts don't see a recovery until there's greater stability in the housing market, banks are lending freely and employment improves.
Unlike other periods that saw precipitous drops, this one is rooted in foundering credit markets. That makes predictions more difficult than if the plunge were based on company profits or stocks alone.
'When you have an environment like this where the crisis is so deeply rooted from the credit standpoint, it adds an extra layer of ambiguity and ultimately of uncertainty,' said Mr Mark Freeman, portfolio manager for Westwood Holdings Group.
'That is what the markets are struggling with.' No turnaround is seen before 2009 or later. And there is a wide divergence of opinion on the future of this bear market, which feels unlike any other because of the US$700 billion federal bailout and the collapse of investment banks.
Even with the Federal Reserve and other major central banks around the world slashing interest rates on Wednesday, experts were hesitant to call a bottom.
'Technical indicators tell us that we're overdue for at least a short-term bounce,' said Ms Liz Ann Sonders, chief investment strategist for San Francisco-based brokerage Charles Schwab.
'That doesn't tell us that the bear market is necessarily over.'
This bear market - a term often defined as a prolonged drop in stock prices of 20 per cent or more - already is harsher than most of the 10 bear markets since the 1930s.
Those markets have lasted an average of about 16 months from peak to trough, with average stock losses of 31 per cent, based on S&P data.
Since the record 83 per cent plunge in 1929-32, the current market is exceeded only by the drops of 49 per cent in 2000-02 during the tech stock implosion and 48 percent in 1973-74 during a recession and energy crisis.
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.
Mr Rob Arnott, chairman of Research Affiliates in Newport Beach, California, thinks the big difference this time is that Americans are feeling increasing pain apart from the stock market.
'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.
Mr Jim Cramer, the normally bullish host of CNBC's 'Mad Money' program, caused a stir on 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 per cent more in shareholder value.
'Everybody wants to think there's a government solution to spare us the pain,' said Mr Schiff, who runs the investment firm Euro Pacific Capital in Darien, Connecticut.
'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 US 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 per cent, it has to rise 50 per cent just to get back to where it started.
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.
Prof 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.' -- AP