Rapid economic recovery isn't likely during 2009, and American investors will have to grapple with a major crisis of confidence.
The markets will probably rebound in 2009, but it's not a sure thing, Mr. Molumphy said. An "extended or protracted" economic recession could delay a market recovery until 2010, he said.
The best part about the year ahead will be that it will only last 12 months, Mr. Malkiel said.
Over the next few months, there will be a lot of focus on the ongoing effects of the credit crisis and regulatory reform. "At the same time, we want to continue to focus on the core investor protections issues."
Financial advisers and industry veterans are worried that investors might reduce or halt their contributions to 401(k) plans if the economy worsens this year.
Commercial real estate is heading into its worst year since the industry's crash of 1991-92 and likely won't see a significant rebound until 2011 at the earliest, according to industry experts.
investors will likely continue to yank assets from mutual funds, more funds will close, and fund launches will come to a crawl this year, according to analysts.
Although political sentiment is warming to environmentally sensitive policies, the green movement may not be ready for a boom in investing in 2009.
By some measures, 2008 was one of the darkest periods in the history of the hedge fund industry.
The economy will continue to weaken, but the financial markets will look at the steps taken by the federal government and react in a positive fashion, Mr. Vahanian said.
