“It ain’t over till it’s over,” Yogi Berra famously said, and Carl Icahn agrees. Unlike many of his Wall Street colleagues, the billionaire investor didn’t greet Uncle Sam’s bailout of mortgage giants Fannie Mae and Freddie Mac with newfound optimism. Nor does he share the belief prevalent in some quarters that the beleaguered market is nearing a bottom after an 11-month plunge in which it lost about $3 trillion in value.

Why such a gloomy Gus? “Because we’re far from out of the woods and it remains a tough, dangerous market,” Mr. Icahn says. “The subprime loan problem is still on bank balance sheets, it has to be fixed and the economy is trending downward, which means,” he tells me, “you have to be extremely cautious.”

His words clearly suggest that Mr. Icahn, who manages a $7 billion hedge fund and boasts an estimated net worth of about $14 billion, believes the downside risk is high even despite the substantial market decline. “It has been a tough year,” he says.

A veteran San Francisco money manager, Gary Wollin, echoes his concern. “Unless you’re brain-dead or living in Disneyland, the facts are undeniable; there’s still a lot more hell ahead for the stock market.”

Mr. Wollin, who manages nearly $100 million of assets under the banner of Gary Wollin & Co., says he thinks the path is clearly down and sees the Dow dropping to about 10,500 and even lower from yesterday’s close of 11,268.92. “I now have 30% cash reserves and I wish it were 50%,” he says.

Mr. Wollin contends that investors grossly overreacted to the Fannie-Freddie bailout by immediately embarking on a major buying spree in which they snapped up a slew of beaten-up housing and financial stocks.

Housing, he argues, is a major risk. “The rescue may be a tourniquet instead of a Band-Aid and stop some bleeding in housing, but it won’t stop it entirely because you still have some 4 million home foreclosures and mortgage delinquencies on the market. There’s a very real question,” he says, “of whether the rescue will stabilize the housing market.”

Mr. Wollin also cites banking’s deteriorating balance sheets — he expects them to worsen due to billions of dollars more in write-downs — which he notes increasingly will begin to encompass commercial real estate; likewise, there are growing problems in auto financing and credit card debt. Let’s also not forget, he observes, that many banks are saddled with Fannie and Freddie’s beaten-up preferred shares. He also points out that a substantial portion of the enormous losses stemming from Fannie and Freddie’s calamities have yet to appear on their books.

Over the long term, he says he views the bailout as a positive in that it will put a floor on the risk to the banks saddled with sizable residential mortgage portfolios, and possibly lead to lower mortgage rates. He also hoists warning flags, notably the swelling jobless rate, which jumped to a five-year high last month, 6.1%. Although housing inventories have moderated somewhat, he says he expects a further jump in unemployment, to around 6.5% by year-end, which he notes would create an even gloomier housing picture because of a surging number of home foreclosures. “Many people just won’t have the money to meet their mortgage commitments,” he says.

His outlook for flat capital spending also leads him to predict a further rise in unemployment, which has already increased this year by more than 600,000 people, to 9.4 million. Still another catalyst for higher unemployment is his strong belief that a rotten holiday shopping season is all but assured, which, in turn, would lead to heavy layoffs at the retail level. “If retailers don’t reduce prices sharply this Christmas, I think their stores will look like ghost towns,” he says, “because most of the rebates have come and gone.”

Yet another worry is the risk of a host of earnings shockers. Giving credence to this concern is the estimated 0.8% third-quarter earnings growth for the S&P 500, a puny figure that’s thought in some quarters to be excessive given the rapidly faltering economy.

The only sunshine he sees is that both the economy and the stock market have been going down for about a year, which suggests to him that most of the negatives should be behind us. “The only problem with that,” Mr. Wollin notes, “is I’ve been saying the same thing for three months.”

The chairman of New York’s Gramercy Capital Management Corp., Joan Lappin, takes a more ominous view of the current plight of the banks, likening it to the 1930s, a decade during which 9,000 American banks failed. “I’m telling friends,” she says, “that I wouldn’t have more than $100,000 in any one bank account” (the amount of protection per depositor guaranteed by the Federal Deposit Insurance Corp.).

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