Will 2002 Market Bottom Stick?(A)(INVESTOR'S CORNER)

Byline: JONAH KERI

Too many investors spent most of 2000 and 2001 hitting themselves on the head with a hammer of crippling losses.

If nothing else, 2002 may go down as the year one of history's worst bear markets ended. Just stopping the pain felt so good.

The bottom didn't come easily. Small-cap stocks teased traders with a rally in the spring. The market appeared to hit bottom in late July and early August. Yet only another harsh leg down, which ended with a traditional trough in October, put the market back on the right track.

Or did it? Rock-bottom interest rates, a rebound in earnings and the possibility of more tax cuts bode well for the market's future. But the lingering stench of corporate malfeasance, global economic uncertainty and the threat of war say duck for cover. It's against that backdrop of tempered, cautious optimism that investors try to peek through the rubble to better tidings ahead.

For the year, the Nasdaq fell 31.5%. The Dow shed 16.8%. The big-cap S&P 500 lost 23.4%, the small-cap S&P 600 15.3%. Given where the major indexes stood in early October after nine months of carnage, most investors will gladly take that final tally.

The market started the year offering hope to investors. The climactic selling following 9-11 seemed to mark the bottom for beaten-down stocks. Defense and security stocks, insurers and consumer firms yielded strong returns in 2001's last three months, providing some optimism.