Attention, stock investors.

Anyone who still has their rifle aimed to shoot the bear, it's OK to put it down now. The bear has left town.

"2002 is going to be a very good year. All the conditions are in place for a bull market," said Hugh Johnson, chief investment officer of First Albany Corp. "The bear market ended on Sept. 21 and a bull market began."

Johnson, who also is the chairman and president of First Albany Asset Management, where he manages $660 million and advises on $1 billion, believess hit on Sept. 21 by the major stock indexes -- 10 days after the Sept. 11 attacks on the United States -- sent the signal to write the bear market's obituary.

"The markets have been sending that signal. Rates have been edging up," Johnson said.

He ticked off the conditions that set the stage for a new bull market:

— "The Fed has eased" — 11 times last year to be exact, driving interest rates down to 40-year lows.

— "We have enough growth in the money supply to drive both the economy and growth in the market."

— "And because liquidity is positive, leading indicators also are positive," including an improvement in consumer expectations and a decline in weekly initial claims for unemployment benefits.


Another Wall Street sage, Robert Stovall of Prudential Securities, and his Prudential colleague, Larry Wachtel — whose voice and views on the market are well-known to 1010 WINS radio listeners in the New York City area — also believe the bear is dead. But they are less optimistic than Johnson about the stock market's outlook for 2002.

"We're in a range-bound market, with not much action up or down," said Stovall, senior vice president and market strategist at Prudential. "The (stock) valuations are 30 to 40 times earnings. There's not much room" to improve.

"Dividend returns average less than 1.5 percent. There's no thrill there," he said.

"And pro forma earnings — maybe we'll see the end of that with Enron," he added, referring to the spectacular fallout from once-mighty energy trader Enron Corp.'s record U.S. bankruptcy filing last month and the daily headlines detailing the accounting practices of its outside auditor, Andersen.

Still, Stovall agrees with Johnson that "the bottom has been seen. We're not going to retest the September lows.

"The bear is dead. But the bull is still a little calf."

Not big enough to ride?

"No. For the time being, he'll have to take some growth hormones."

Wachtel, senior vice president and market analyst at Prudential, said stock investors can take some comfort from history.

"If you look at the track record of bear markets, we've had two back to back," Wachtel said. "The last time we had three bear markets back to back to back, was from 1939 to 1942. So it's been 60 years since we've had three years of bear markets" in a row.

"It looks like we're coming out of the recession — either the first quarter of this year or the second quarter, the recovery will kick in.

"Looking ahead," Wachtel added, "most bull markets begin in the depths of recession — just as this one began in September. The bull market that began in 1995 and went to 2000 was a spectacular one. This is a tepid bull ... a baby bull."

On a conservative note, Anthony Chan, senior managing director and chief economist of Banc One Investment Advisors, told clients in a note this week that "the current recession might still end up as one of the shortest and most shallow of recent memory."


Chan points out the rate on the 10-year U.S. Treasury note "dipped by nearly 55 basis points during the middle third" of the current recession, which the National Bureau of Economic Research, the official arbiter of U.S. recessions, has pegged as beginning in March 2001.


For 2001, the number of stocks that rose on both the New York Stock Exchange and the Nasdaq outnumbered stocks that declined — a reversal of the advance/decline ratio for both markets in 1998, 1999 and 2000.

There's a message in that, Wachtel said.

"Look to what the market is telling you," he said. "Don't look at just what the averages are doing."


In Wachtel's opinion, in 2002 "probably we'll have a decent year. On Wall Street, we have an expression: It will be a blocking and tackling year."

The football term describes steady but not spectacular progress.

From the low on Sept. 21, 2001, to the high on Jan. 4, 2002, the Nasdaq climbed 45 percent, the Dow gained 25 percent and the S&P 500 rose 21 percent.

"Having had those spectacular gains, we now need to take some time to digest them," Wachtel said.

In a blocking and tackling year, stock investors can make money if they pick their stocks carefully, Wachtel said.

Stovall of Prudential called this year "a base-building period."

He believes investors should consider some balance in their portfolios by adding Treasury Inflation-Protected Securities, or TIPS, which pay a 3.5 percent coupon rate plus an adjustment equal to the Consumer Price Index's annualized growth rate.

"If you think there's a chance inflation could rise, it's a nice building block," Stovall said.

In the stock market, Stovall likes the agriculture, health care and hospitality sectors.

"There will be more government subsidies to farmers, so farmers will plant more," Stovall said. "That should be good for companies that make potash and other fertilizers, companies like Potash Corp. of Saskatchewan Inc. ."

Stovall also recommended "the hospital supply companies. I like Becton, Dickinson and Co. J&J and Pharmacia Corp. ," based on the number of new products in the pipeline.

And he believes "the hospitality industry will recover as Americans overcome their fear of traveling. So I'm using the REITs — like LaSalle . And I like Host Marriott , which has the Marriotts and the Ritz-Carlton."

For the week, the Dow Jones industrial average fell 215.68 points, or 2.2 percent, to 9,771.85. The Nasdaq Composite Index slid 92.12 points, or 4.55 percent, to 1,930.34. The broader Standard & Poor's 500 Index dropped 18.02 points, or 1.6 percent, to 1,127.58.