(FORTUNE Magazine) – In the wake of devastating currency declines, the Southeast Asian stock markets are shuddering. Since early 1997, equity prices in Indonesia, Malaysia, the Philippines, Singapore, and Thailand have plunged as much as 55%. Now adventurous investors stand uncomfortably at the intersection of fear and greed: Optimists say these markets are cheap; pessimists counter that they deserve to be. So who's right? We asked experts on both sides.

--The pessimists' case. "If you're calling about Malaysia, please hang up." That's the curt outgoing message Doug Loeffler, manager of the Founders International Equity Fund, left on his home answering machine earlier this fall. At the time he was fed up with Southeast Asia, having just spent four days wrangling with brokers and lawyers to get out of a Malaysian stock. He's calmed down since then but remains sour on the region's prospects. "Since we don't have to be in Southeast Asia, essentially, we aren't," he says simply.

Why? Pessimists point to concerns that go well beyond the Malaysian government's bellicose rhetoric about currency trading. These economies, they argue, have structural problems that may drive the markets down even further. Among the concerns: a hangover from rampant real estate speculation, bad corporate debt, and a glut of production capacity. But the big worry is that the region's governments will not take the unpopular steps necessary to bring about genuine change. "We have not seen the will on the part of the politicians," says Julie Wang, co-manager of the BT International Equity fund. What do the cynics want? Solid restructuring plans and the cancellation of big infrastructure projects, not to mention a few real bankruptcies to cleanse the economies. Until such things happen, pessimists say they don't see the markets doing anything but stagnating or sinking even more.

--The optimists' case. Those who are more upbeat on the region agree that there are major problems, that interest rates will be higher, and that the growth rate will be slower than before. But they contend that all these negatives have been priced into stocks.

Gary Greenberg, manager of the Van Eck emerging-markets growth fund, notes that these stocks are as cheap as they've been in the past ten years. And yet high personal-savings rates of around 30%, sound elementary education, and significant infrastructure investment during the past decade are all evidence that these economies are fundamentally sound for the long run.

What's more, optimists argue, a recovery should be aided by a surge in exports: The currency devaluations make Southeast Asian goods 20% to 30% cheaper in U.S. dollar terms, according to Chen Zhao, editor of the Bank Credit Analyst China. Finally, the hopeful side of the debate asserts, if you're too cautious on the region and wait on the sidelines, you could miss out on the real payoff. "Markets often snap back before economies do, and investors have to be quick, because these markets can rebound as sharply as they fall," says Peter Marber, president of Wasserstein Perella Emerging Markets. Zhao already sees the signs of a comeback. Only a month ago he was saying "stay away"; now he believes currencies and interest rates are showing signs of stabilizing.

--Your move? With such discord on the region's future, maybe the best strategy for individual investors is to look beyond the disagreements to the areas where both sides actually agree. Most significantly, even the doom-and-gloomers don't think the current state of affairs will extend, Japan-like, for a decade. In other words, the debate really boils down to not whether these economies will rebound, but when--now, in a few months, or in a few years. For individuals that means sorting out how long you're willing to wait for a payoff--and how comfortable you are with the risk that the story will take a turn for the worse while you're waiting.