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Is It the Bottom or Bear Market Rally?

After suffering through one of the most significant market downturns in history, investors are asking if the worst is over ... if the bottom has been reached.

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Some experts think so, although they are careful to hedge their comments. Monday's market surge might not be the absolute bottom, they note, but it is an indication that some stocks and sectors are too cheap to pass up. And that buying will put in a floor, if it hasn't already, they claim.

"There will certainly be a lot of retrenchment in the real economy, but the stock market tends to look ahead," Mark Mobius, lead portfolio manager at Templeton Asset Management, said on CNBC's "Squawk Box" Monday morning. "...You will probably see a few more declines, but we're beginning to see the bottom of this and so the opportunities are quite interesting, quite attractive." (Click here for more on Mobius' thoughts.)

Others don't totally agree. They think the market surge is simply a spate of buying in a generally depressed and downward moving market. But they also suggest investors take advantage of it.

"Yes, I do believe this is a bear market rally," said Christopher Zook, CAZ Investments and Marc Pado, Cantor Fitzgerald, in an interview on CNBC. "Yes, I do believe it's going to take time for us to bottom and put in a good solid base. But for people that have allocations that need to be adjusted back to equities, they need to get their courage up and start allocating cash back to stocks." (See video for his full comments)

Last week, as a result of the ongoing credit crisis facing the world's banks, the Dow lost 1874 points or down 18.15 percent. The S&P ended the week down 200.01 points, a 18.19 percent drop, its second worst drop ever. And the Nasdaq Composite ended down 297.88 points, a 15.30 percent drop. (Click here for a review of last week's markets)

Amid the market fall, central banks and governments scrambled to formulate plans to prop up the world's financial sector. While the efficacy of those efforts remains to be seen, the moves have injected a glimmer of confidence into the markets. That makes now the time to buy, some market managers claim.

"If you wait for every thing to be solved the market is already going to have discounted that and probably be up 15-20 percent," Bill Smith, president, CEO and senior portfolio manager at SAM Advisors. (Smith suggested investors look at Apple and Textron: See his full recommendations here).

To be sure, many economic storms still beset the investing climate. Beyond the current banking crisis, many of the world's major economies are in or close to recession, some economists believe. That would limit growth prospects for many businesses and, as a consequence, their stocks.

Indeed, during Monday's market action there were some traders selling into the rally.

But in the recent market pounding some stocks have seen their prices fall drastically, even though their fundamentals and earnings potential remains solid. That is giving them very attractive valuations relative to their individual history and the general market, portfolio advisers argue.

"We think we're at the tail end of a panic which has disconnected stock prices from business realities," said David Katz of Matrix Asset Advisers. (He's advising investors to look at Dell , Cisco and Devon Energy - see his full comments here).

Still, some experts are urging caution.

"I do not see us defining a new bull market in equity risk assets until we know exactly what this recession looks like," Tim Harris from JPMorgan Asset Management told CNBC. The underpinning is in place for the market, Harris said, but the next twelve months will prove a very bumpy ride for investors and economic weakness will remain to the next two years.

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