The worst bear market since 1937-38 has crushed investors, top fund managers and market strategists. Here's why I still think it's time to hold your stocks -- or buy more. By Steven Goldberg, Contributing Columnist December 23, 2008 There has been no place to hide in this, the worst bear market since the 1930s. Precious metals, oil and gas, real estate, foreign stocks, small stocks, large stocks-they have all been pummeled this year.Some of the best fund managers of our time have had their heads handed to them. Most notably, Bill Miller, manager of Legg Mason Value Trust (symbol LMVTX), which beat Standard & Poor's 500-stock index a record 15 years in a row, has lost 57% through December. 22. Longleaf Partners (LLPFX), one of the most storied value funds, has plunged 47% over the same period. Dodge & Cox Stock (DODGX), another value fund with a very long and very good record, is down 40%. What did the managers of these funds do wrong? I think they became too conditioned to buy the dips. Buying stocks that are tremendously out of favor with most investors-stocks that look cheap -- has long been perhaps the most successful strategy in investing. But it didn't work this year -- certainly not with companies such as Fannie Mae, Freddie Mac, Lehman Brothers and Washington Mutual either failing or coming close to doing so. Similarly, some of the best market strategists have been dead wrong. Steve Leuthold, who heads the Leuthold Group, a Minneapolis-based investment- research firm, has been a top market prognosticator for half a century. But he turned bullish this year, just as the market began its freefall. Like Leuthold, Sam Stovall, chief investment strategist at Standard & Poor's, spends a lot of time looking at market history in making his predictions. He, too, turned bullish when he should have shouted "Sell!" Advertisement I haven't been a hero to my readers this year either. I thought the market had hit bottom several times -- when it was just beginning to fall further. As the market fell more, I became increasingly sure that prosperity for stock investors was just around the corner. What went wrong? Historically, when investors are panicked and the Federal Reserve is aggressively lowering interest rates, the market is ready to turn back up after an average bear-market loss of about 31%. But there has been nothing average about this bear market. At its worst, so far, the market has plummeted 52%. The last bear market that bad was in 1937-38, and the only one appreciably worse than the current one was-you guessed it-1929-1932, when stocks plunged 89%. Why is this market so much worse than the previous ones? Here, the answer is simple: The financial crisis and the recession, which is still deepening, turned out to be far worse than most experts anticipated. Almost all mainstream economists still think it's extremely unlikely that the U.S. economy will experience anything like the Great Depression this time around, but the current recession looks worse than any since World War II. Advertisement What should investors do now? I say, you have to keep investing. Stocks are cheap, the mood among investors could hardly be blacker, and the Federal Reserve states it's willing to do anything it can to fix the financial system. We're now most of the way through the worst decade for stocks in the past 100 years -- including the Great Depression. On March 24, 2000, the S&P 500 stood at 1,527. The S&P closed December 23 at 872. That's a loss of 43%. The darkest hour in stocks usually is just before the dawn. Bear markets typically end in gloom -- and high volatility. I'd rather be a buyer of the S&P at 872 than at 1,527 -- when investors were wildly exuberant. When the next bull market arrives, it will do so without anyone firing a starting gun -- and stocks will likely rise far and fast. That's what usually happens at the end of bear markets, especially severe ones. Not that I know when this most severe bear market will end. Steven T. Goldberg (bio) is an investment adviser and freelance writer.