NEW YORK — Is it time to sell everything or buy with abandon? Investors can't make up their minds, evident by one of the most volatile weeks in the history of Wall Street.
It's frightening, but experts' advice is hold tight. It's not time to sell, but it's probably not time to pour money into stocks, either.
"The stock market has done so well historically that, even if it is overpriced, you're likely to do OK," says Robert Shiller, a Yale University economist famous for having warned against bubbles in technology stocks and housing.
He said he thinks the stock market is overvalued by historical averages but it is closer to fairly valued than it has been in its recent past. He suggests investors move their money "modestly" into stocks.
Some gauges of market value suggest stocks are no great bargain. But since the Great Depression, shallow bear markets — drops of 20 percent or so in stock prices — are much more common than the huge plunges of 2008.
Of the 12 bear markets since the Great Depression, only three have qualified as "mega-meltdowns," with drops of 40 percent or more, says Sam Stovall, chief investment strategist at Standard & Poor's.
The market isn't quite in bear territory yet. The Dow finished Friday up about 1 percent. Since the market's highs of April 29, the Dow is down 12 percent. The S&P 500 is down 13.5 percent.
Though history is only a rough guide, Stovall suspects that any coming bear market won't be severe and will end quickly. Bear markets last 17 months on average.
Stovall is cautiously bullish. He says investors tend to dwell on the recent past when investing in stocks, so they're selling now because they fear a repeat of the 2008 collapse.
A lot of Wall Street pros say you'd be a fool not to buy stocks now. Prices seem low compared with what stock analysts expect companies to earn this year. But these pros are almost always saying to buy.
Robert Doll, chief equity strategist for money manager BlackRock in New York, said a recession is unlikely, but he isn't ruling one out. Still, he's bullish on stocks because so many companies are making money overseas. That means trouble in the U.S. economy matters less to U.S. stocks.
"The U.S. stock market and the U.S. economy are increasingly unrelated," Doll says. "If the U.S. economy is muddling through, the stock market can certainly rise significantly."