The bears' burly growls continue to rattle the markets. The Dow blew right through the illustrious November lows and now sits at 1997 levels. The months-long sell-off led by banking stocks such as Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), and Citigroup (NYSE:C) has spread to almost every other sector, helping stocks from Pfizer (NYSE:PFE) to ExxonMobil (NYSE:XOM) to General Electric (NYSE:GE) to swoon.

How much further do we fall from here? Is this a shrewd or scary time to invest? Bill Greiner, chief investment officer for UMB Asset Management and UMB Bank, and chief economist for Scout Investment Advisors weighed in during an interview.

Jennifer Schonberger: After retesting the Nov. 20 lows on the Dow for almost the entire trading week we finally broke through to a new low. How bearish is this signal given that in some ways the Dow is merely a broken index because of its exposure to the financials?

Bill Greiner: It's significant from the standpoint that people look at those things and it tends to influence sentiment and attitude toward the markets. There's nothing magical in my mind about breaking the new low, beyond the sentiment issue. But sentiment is real because basically sentiment is an attitude -- people’s attitudes toward equities and their willingness to take risk. Their willingness to take risk right now is just about zero. So I don't expect the market to start to move back to the upside just due to momentum without that sentiment issue changing.

What needs to happen for the stock market to start gaining traction is an announcement needs to be made that clears the smoke from the battlefield so people can look out at the economic horizon and forecast with some degree of clarity what's going to happen more than 30 or 60 days out. Right now people just can't do that.

To provide an example, if you look back at 1942, people were wondering about the future of democracy. In April of that year Jimmy Doolittle held his raid on Tokyo and a few American bombers bombed Tokyo. The damage was minimal and was more a knock to the Japanese empire at the time. What it did, though, was bolster the American psyche into thinking "we can probably win this war." That day marked the low on the Dow for over the next four years.

Schonberger: Now, is that clarity going to come from the details that will eventually be unveiled for the banking plan?

Greiner: It could be. In fact when [Treasury Secretary Tim] Geithner made his comments a week or two ago, that's exactly what I was looking for -- enough details to where it created clarity regarding the banking system. That could have been the catalyst to get this thing moving back to the upside. So that could happen in the next couple weeks when Geithner makes his announcement.

Schonberger: So until we gain that clarity, is this the beginning of another free fall? Where do we go from here?

Greiner: I doubt it's going to be a free fall because the market is already down close to 50% in value from where it was just a year and a half ago. If you compare this to past bear markets, this market is a vicious bear market and it doesn't have to go down a lot more to fully discount a lot of bad things. I'd be surprised to see another 20% or 30% drop in the market. Could we go down another 400 or 500 points? Very possibly.

... I'm not telling people to go out and buy equities now by any stretch, but the stage seems to be set for the market to start moving to the upside some time later this year. Now it may happen next week, next month, I don't know. But the stage is set. We just need that point of clarity to give us an idea of what lies in front of us. Once that clarity is reached I think we're headed higher.

Schonberger: So would you wait until that point of clarity before putting new money in or pursuing investment opportunities?

Greiner: Absolutely. I would wait for that point of clarity. And when that happens, people are going to recognize it. The market could potentially react violently on the upside over a short period of time.

Schonberger: Given the amount of government intervention that is taking place, is this the beginning of a longer period of time dominated by muted returns in equities given the government's involvement in the markets and the economy?

Greiner: We've gone through a period over the last 12 years where equity returns have in essence been zero. Usually when that happens historically, and we've done a study going back to the 1800s looking for those periods over a 10-year time period where the market yields negative returns, generally speaking the next 12-month period of time the market rises by at least 16%. So over a short-term period of time (12-18 months) my guess is the market rebounds upwards once that clarity point is reached.

Now beyond this transition period that I'm talking about I could see periods where the market is up and down in a trading range like it has been, by the way, for the last 10 years. I don't see anything out there that's going to break that trend. But if we get back up to the old high 14,000, 7,400 is a great buy.

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Fool contributor Jennifer Schonberger owns shares of Bank of America (ai caramba!), but does not own shares in any of the other companies mentioned in this article. Pfizer is a Motley Fool Inside Value recommendation, as well as a former Income Investor selection. The Motley Fool owns shares of Pfizer and has a disclosure policy.