The big bad bear on Wall Street
By STAFF Kate Ballen, Alan Farnham, Carrie Gottlieb, Christopher Knowlton, Stephen J. Madden, Louis S. Richman, Patricia Sellers

(FORTUNE Magazine) – ''I don't like losses, sport. Nothing ruins my day more than losses.'' So seethes Gordon Gekko, the reptilian raider played by Michael Douglas in Oliver Stone's new film, Wall Street. The year is 1985, and the market is booming. The Great Gekko bets only ''on sure things.'' Boy, what a time he would have today. No one knows if the bear is here to stay, but pessimism prevails on noncelluloid Wall Street. Kidder Peabody is laying off 1,000 employees across the board. L.F. Rothschild Holdings, reeling from huge losses related to the market crash, is cutting 700, about 40% of its staff. Shearson Lehman Brothers, which plans to buy E.F. Hutton, is expected to slice thousands from the combined work force (see page 10). And a shrinking Salomon Brothers pulled out of a deal to co-develop a huge new headquarters building in New York; as a result, it will charge $51 million against fourth-quarter earnings. The stock market is showing plenty of ursine signs. It has more than satisfied the usual bear market criterion of a 22% decline -- prices have fallen about 30% since late August. Another symptom: Declining issues are vastly outnumbering advancers (see chart). Bear markets usually last about 15 months. (For what to do now, see Personal Investing.) Recent market rebounds have tended to be ''traders' rallies'' -- big institutions buying blue chips to reap short-term profits. Foreign investors, who piled about $18 billion into the U.S. stock market during the first six months of 1987, aren't selling, but they aren't buying either; they have been stung by the drops in both stock prices and the dollar. Individual investors have bailed out in a big way: Only about 26 million are in the stock market now, vs. a record 50.7 million at the end of August, according to Sindlinger & Co., which tracks household liquidity. With so little activity, picking stocks and selling them have become demoralizing exercises. ''A lot of clients don't give a damn about individual stocks anymore,'' says a financial analyst. ''Everything is cheap if the market is going to 2200, and everything's expensive if it's headed to 1200.'' Beyond Wall Street, the mood is mixed. Down in rural Georgia, forecaster Robert Prechter, who turned bearish just before the market crash, sees two big rallies between now and the end of 1988, followed by a ''monolithic'' decline. In Boston, Peter Lynch, the all-time pro among fund managers, is bullish; he has about 96% of Fidelity Investments' Magellan Fund in stocks. (The fund was 99% in stock precrash and has lost 21% since October 19.) The view from Omaha, where billionaire investor Warren Buffett keeps shop, is that the market dives don't matter. ''The market is there only as a reference point to see if anybody is offering to do anything foolish,'' says Buffett, 57. ''When we invest in stocks, we invest in businesses. You simply have to behave according to what is rational rather than according to what is fashionable.''

CHART: NOT AVAILABLE CREDIT: SOURCE: GOLDMAN SACHS CAPTION: Ursine signs: declining stocks (chart) and announcements of staff cuts, here at L.F. Rothschild. DESCRIPTION: Number of stocks rising and falling, quarterly, August-December, 1987.