Investors are experiencing an attitude improvement as they head into 2002: They feel good, even enthusiastic.

Investors, both institutional and individual, expect the economy to recover, earnings growth to resume and the market to head back to higher ground.

Following a year of sinking stock prices, recession and terror attacks on the world's financial hub, their optimism is proof of Wall Street's much-touted resiliency. Still, investors are a long way from feeling the exhiliration of the late 1990s and early 2000, before the high-flying technology sector fell so hard.

"I feel more confident than I did going into 2001 when I was hoping for the best, but expecting the worst to happen. (Then) I almost felt like I was sitting at a blackjack table,'' said Robert Volmer, head of a lobbyist firm in Washington.

Now, "I see tremendous upside ... I am really optimistic. I am excited about next year,'' Volmer said.

Institutions have also grown more bullish: A mid-December research note by Credit Suisse First Boston is titled, ``2002 - Bring it On!''.

CSFB calls for an economic recovery and double-digit growth in profit margins ``as 2002 marks the next up leg of the three-year business cycle.''

Hopefulness has been increasing on Wall Street, feeding weeks of buying that have brought the market's major indexes well above the lows reached Sept. 21 when stocks dropped following the Sept. 11 terror attacks in New York and Washington.

Of course, new attacks, or a discovery that the economy is in worst shape than now is perceived, could change investors' upbeat outlook for 2002. But for now, there is general agreement that things can't get much worse than 2001, scarred by a recession, which the economy officially slipped into in March, and the worst earnings decline in 11 years.

Market analysts estimate that earnings for the Standard & Poor's 500 index will be down 16.1 percent for 2001, a perfect reverse of its 16.1 percent gain in 2000 and the worst profit decline since 1991 when the average bottom line for America's largest companies fell 16.7 percent, according to Thomson Financial/First Call.

While the market doesn't expect business growth to bounce back right at the dawn of the new year, at least ``the pace of the slowdown is slowing,'' said Scott Bleier, chief investment strategist at Prime Charter Ltd.

Expectations for 2002 are more modest than in the late 1990s bull market, when investors took for granted that the market would increase by as much as 20 percent a year. Analysts surveyed by Thomson Financial expect the market to advance in the mid-teens, while Chuck Hill, director of research, said low single-digit earnings growth is more likely.

"The problem is the first quarter,'' said Hill, noting that several big companies, such as Merck and Ciena, have said profits will continue to slump in the first three months of 2002. "There is a reasonable chance that the second quarter could be up from the first, but that's not a given. It's the earliest you could expect an upturn.''

Hill's assessment - cautiously optimistic - is typical of many investors and analysts.

"Investors are heading into 2002 with a newfound affinity for stocks, but with some caution on the side,'' said Brian Belski, fundamental market strategist for US Bancorp Piper Jaffray. "The earnings depletion was so severe that it's going to take time, quarters to build confidence.''

Belski's advice is for investors to be patient and to diversify.

That's the approach Susan Stern, a New York public relations executive, adopted this year following a 25 percent decline in her portfolio due to the beleaguered technology sector. Stern reduced her portfolio's tech holdings and replaced them with non-tech companies, such as Lowe's, that she believes will fare well as the economy gains its footing.

"I feel looking at the long term is best,' Stern said. "I think more people will get back to work over the long haul. Businesses are building.''

"I think we are in for another growth period, but it will be slow. People have to be patient. Everything comes back around,'' she said.

Coming back to positive territory - no matter how minor - is what the market will spend much of 2002 doing, analysts said. There won't be a stampeding bull market, but the bearish times are ending.

"What investors need to hold onto is: The lows have been made. And, the majority of bad news is behind the stock market,'' Belski said. "I'm coining 2002 as the year of the turnaround.''