Welcome to the 15th installment of our weekly fund review, in which we scrutinize the past week's notable fund news and tell you what it means for Foolish investors.

Doom and gloom forecast
The stock market's downward spiral the past few weeks has made investors everywhere pretty jittery. No one is sure when and where it will end. But one fund manager thinks things are going to get a lot worse before they get better. David Tice, manager of the Prudent Bear Fund (FUND:BEARX), is predicting the U.S. economy is headed for its worst recession since World War II. Tice, who has been referred to as the "Dr. Death" of Wall Street, forecasts a 30% drop in the market through the end of the year, followed by another 20% drop in 2008. He is also calling for housing prices to fall at least 20% in the next year and a half.

Now in all fairness, Tice is a professional merchant of doom. His Prudent Bear fund focuses on shorting stocks, so it's designed to do well only during bear markets. In fact, the fund posted a 145% gain during the bear market spanning April 2000 to September 2002. But over the past five years and since its inception in 1995, the fund has a net negative return.

According to the fund's latest report, the fund holds several bearish positions in put options on several dozen companies, including Schering-Plough (NYSE:SGP), Volcom (NASDAQ:VLCM), and Morgan Stanley (NYSE:MS) -- along with several other financial companies. Tice does have some long positions in the market, almost exclusively in precious metals and resources stocks such as Golden Cycle Gold (NASDAQ:GCGC), Crosshair Mining & Exploration (AMEX:CXZ), and International Tower Hill Mines (AMEX:THM).

Perfect for pessimists?
As far as bear market funds go, Prudent Bear is one of the oldest such funds and does a pretty decent job of generating returns when the market is down. It is rather expensive, with a 1.77% net expense ratio, but that's actually below the bear-market fund category average expense ratio of 2.05%.

If you're a pessimist and feel the need to move into a bear market fund, this is probably one of your best choices. However, it's unlikely that such funds will do well if the market does anything less than completely bottom out. It can be tricky to time market drops, and more often than not, investors will get it wrong.

Ultimately, it may not pay to move any portion of your assets into a bear market fund in anticipation of a further market decline. If you are focused on the long term, you should stay invested in the market. Downturns like those we have seen in the past few weeks are difficult to stomach, but they have a way of evening out over the long run.

And try not to lose too much sleep over Tice's doomsday scenario. Sure, things could get much worse, but you shouldn't obsess over any worst-case (or best-case) scenario. Remember those predictions back during the bull market for Dow 50,000 and Dow 100,000? I didn't think so.

401(k) balances expected to rise
Despite the gloomy market forecasts, the news is not all bad for American investors. According to new research by economists from MIT, Harvard, and Dartmouth, the average 401(k) balance is expected to rise dramatically in the coming decades. This new data shows that the average plan balance is forecasted to be $452,000 by 2040, compared with just $29,700 in 2000. The study also found that the increase in 401(k) assets will more than offset the decline in defined-benefit pension assets. These findings appear to fly in the face of prior evidence, which suggests that investors are not saving enough and likely won't be prepared for retirement. It has been suggested that earlier studies were examining a less "mature" 401(k) industry, and now that investors have had time to adjust to a new way of saving for retirement, they are doing a better job than previously thought.

It's nice to hear a bit of good news on the retirement front for a change. But while these projections bode well for investors, they should keep in mind that in 2040, their 401(k) is likely to provide almost all of their retirement funding. It is unclear how much Social Security will be able to provide for retirees in 33 years, and health-care costs are likely to be an additional burden. At any rate, the retirement landscape in 2040 is bound to be very different than what it is today. So remember to do the most important thing you can do to ensure a comfortable retirement -- save as much as you can, as soon as you can. That way, you'll stand a terrific chance of coming out ahead of the retirement averages.

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Fool contributor Amanda Kish lives in Rochester, N.Y., and does not own shares of any of the companies or funds mentioned here. Volcom is a Motley Fool Hidden Gems recommendation. The Fool has a disclosure policy.