With government and Wall Street officials working feverishly over the weekend to rescue ailing Lehman Brothers Holdings through the sale of parts or all of its assets, the big worry among Street pros is how many more troubled companies will holler for federal help following the bailouts of Bear Stearns, Fannie Mae, and Freddie Mac.

A host of names have popped up, including brokerage king Merrill Lynch, insurance giant American International Group, and the country’s biggest savings and loan, Washington Mutual.

The well-regarded chief investment strategist of Raymond James Financial, Jeffrey Saut, says he figures the selling stampede in financials is far from over, as it will take years to resolve the sector’s problems.

The International Monetary Fund, which is predicting more than $1 trillion in bank losses arising from the current credit crisis, also sees the need for a lengthy recovery process. So far, the major banks have booked about $506 billion in credit losses, more than triple the total lost in the savings and loan crisis of the 1970s.

If these forecasts are right, it suggests the bailout trend is likely to embrace considerably more financially ill candidates. It also signals to some market watchers a bigger outburst of government-led bailouts — ones in which Uncle Sam may ante up big bucks to help effect corporate rescues.

Money manager Selwyn Ortz of Hong Kong-based HK Investments Ltd. takes the discussion one step further. He contends the selling stampede will accelerate — not just in financials, but in the overall market. “It has become a popular guessing game, trying to pick the next financial failure,” he says. “What’s worrisome is that the general market reaction is so negative.”

More chaos on the banking and corporate front is also envisioned by Michael Larson, the associate editor of the Safe Money Report, a Florida-based investment newsletter. “Six months ago, after the Bear Stearns bailout, we were told, that’s it — that the financial crisis was over,” Mr. Larson says. “Then came Fannie, Freddie, and Lehman. Now, it’s a question of who’s next.”

The newsletter’s latest issue attempts to answer that question, serving up a number of potential candidates that have already been bloodied. Potential failures include Wachovia, Washington Mutual, HSBC, SunTrust, National City, Sovereign Bank, General Motors, and Ford.

Zeroing in on the last two, Mr. Larson notes that the auto industry is already panhandling in Washington for $50 billion or more in federally subsidized loans to revamp their factories and product lines to produce more fuel-efficient cars.

As for the banking sector, while only 10 have failed so far this year, the number of troubled banking institutions on the Federal Deposit Insurance Corp.’s watch list — a five-year high of 117 — suggests the failure rate will accelerate. A bank analyst at Sterne Agee, Sean Ryan, concurs, saying he expects about 100 bank failures before the end of 2009.

One of the most bearish economists around, Nouriel Roubini, a professor of economics at New York University, has been making the editorial rounds, repeatedly noting that “we’re only at the beginning of a serious banking recession.” He, too, sees a rash of banking failures ahead. If he’s right, the bailouts by Uncle Sam are only in their early stages.

It all raises a critical question: How should investors protect themselves in such a treacherous, roller-coaster investment environment? That’s on the mind of a concerned reader, Jonathan Hall, who asked via e-mail the other day: “Other than selling everything and going 100% into cash, what’s the best way to protect yourself and escape the graveyard in this insane market?”

About four months ago, I posed a question along similar lines to Mr. Larson. Given the events that have taken place since then, I asked him to update his view. As one of the best portfolio hedges, he continues to favor a number of inverse exchange-traded funds, which are designed to rise when a particular index or market sector goes down in price. In some cases, these ETFs are leveraged to rise twice as much as the decline in an index or a sector.

At present, his top picks are UltraShort Financial ProShares (SKF), UltraShort Real Estate ProShares (SRS), UltraShort Consumer Services ProShares (SCC), UltraShort Technology ProShares (REW), and Short Dow 30 ProShares (DOG).

dandordan@aol.com