Investing now: are there any refuges left?

NEW YORK (Fortune) -- This is the time of year when I usually talk about what we can learn from the tech and telecom stock bubble, which peaked on March 24, 2000, when the Standard & Poor's 500-stock index and the Wilshire 5000 both hit their all-time highs. Stocks subsequently tanked and didn't regain those heights until February 2007, making them dead money for seven years. That defied the average of double-digit returns stocks had earned annually since the start of 1926.

But given how horrendous the markets have been lately (despite today's rally), there's no need to rub salt in your wounds (or mine) by reminding you that although the market tends to rise over the very long term, it doesn't necessarily rise over any particular period. When will stocks stop falling? I don't know, and nobody else does, either. Every time you hear various yammerers opining on that topic, remember that if they really could call market turns, they wouldn't be sharing the information with you without getting paid for it.

And now for some painful math. The Wilshire, the broadest measure of the U.S. stock market, is down 57 percent (or $11.2 trillion) since it peaked on Oct. 9, 2007. For the Wilshire to get back to that peak, it would have to rise 15 percent a year, compounded, for six years. Under that scenario, stocks would have gone nowhere for 71/2 years. Even old standbys aren't working in this market. Dividends, formerly a selling point for owning the broad stock market through an index fund, aren't doing much for investors lately. Two of the country's biggest dividend payers -- Citigroup and Bank of America -- reduced their payouts to a token penny per quarter as a condition of getting repeat infusions of bailout money from Uncle Sam. Two more dividend biggies -- General Electric and J.P. Morgan Chase -- recently cut their payouts by 68 percent and 87 percent, respectively.

So even though it's enormously frustrating to see your money-market funds earning less than 1 percent, these cuts make it abundantly clear that buying high-dividend stocks carries serious risks. Not only can the share price fall, but the dividend can shrink or vanish.

Then there's another traditional refuge: U.S. Treasury securities. The short-term ones yield almost nothing, and the rates on long-term Treasurys are so low (and thus their prices so high) that they constitute a bubble. When the worldwide financial panic abates, Treasury yields will soar and the prices of existing bonds will drop. Of course, I was down on Treasurys last year, too -- and they returned about 20 percent in interest and price appreciation. But rates on long-term Treasurys can't fall below zero, which means their upside is capped while their downside is enormous.

I currently have about half of my investable assets in cash. That's partly because I'm so uncertain about what the near-term future holds and partly because my stocks and stock mutual funds have gotten clobbered, shrinking the total value of my investable assets. So I feel your pain.

Because I'm 64 and fortunate enough to still be earning enough to be in a high tax bracket (though unfortunate enough to fall prey to the accursed Alternative Minimum Tax), I've bought my first-ever municipal bond, which is tax-free, and have been putting money into tax-advantaged, income-oriented securities such as closed-end municipal bond funds. That's not a judgment about the stock market; it's about wanting to lock in some income now rather than wait until after I hang up my word processor.

I still believe what I wrote in December -- that U.S. stocks are a reasonable bet for people with a time horizon of at least six or seven years. The Wilshire has fallen 22 percent since that column appeared, which makes stocks a better bet because there's less downside than there was. But boy, do things feel creepy.

Sooner or later -- hopefully sooner -- the stock market and economy will turn around, and their hideous declines will become history rather than current events. When that finally happens, remember this: the stock market's 9.24 percent annual return from Jan. 1, 1926, through last Friday (as calculated by Morningstar) is only an average. It's not a guarantee.

Allan Sloan is Fortune magazine's senior editor at large. His e-mail address is asloan@fortunemail.com.