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Sometimes, writing about the stock market is like being Alice in Wonderland. You can't believe what you are seeing, and you question your sanity. I remember feeling that way earlier this year when tech stocks reached historic highs, and I feel that way now that the market is falling like Alice down the rabbit hole.

During the run-up, I could not understand how investors could value so highly technology companies with such uncertain futures. Today, I am amazed at the complacency after the

Nasdaq Composite Index has fallen 39% from the peak, its worst showing since the oil-induced recession of 1974.

Let's review some of the reasons to be concerned about buying technology stocks at current prices, in no particular order:

  • Oil prices are spiking again and could remain higher for longer than anyone predicted just a few weeks ago. That's a drag on economic growth and the earnings of all companies -- including the techs. Economic slowdowns have not been outlawed. Nor have recessions. I spoke with the CEO of a medium-sized manufacturing company in New England today, and he told me that his company's energy bill has doubled in the past 60 days. His response? Cut costs anywhere he can. Protect market share. Muscle his suppliers on price. Multiply that response and you could get a slowdown worse than expected.
  • Bank stocks and other financials cannot rally because of fears of loan problems or trading losses. Having covered banks and brokerages in the late '80s and early '90s, I'd only say that when you begin to hear whispers and worries about "credit problems" in the financial sector, the news will be worse and last longer than you think.
  • Many of our best companies are warning of slower earnings growth for the third and, now, fourth quarters. How do you think the market would react if Intel (INTC) warned on fourth-quarter earnings next week? I don't know.
  • The "wealth effect," through which stock market riches lead to robust economic growth, is transforming before our eyes into a " poverty effect."
  • Dot-com problems do not cease. For instance, New York Times (NYT) today pulled its planned Internet IPO.
  • The price-to-earnings ratio of the Nasdaq Composite remains in the stratosphere despite its 39% decline from the high. (The Comp's trailing P/E was 182.1 as of Tuesday, according to Ned Davis Research in Nokomis, Fla. That is not the kind of P/E you see at a bottom.)
  • Tech bulls are increasingly packed into an ever-smaller number of tech highfliers with P/E's in the hundreds. They will eventually get hit, too. They always do in a bear market. In 1990, no stock was flying higher than Microsoft (MSFT) . It was a free-cash-flow machine with great growth and a monopoly position. And even it got clobbered in the 1990 minibear market. On July 23, 1990, the P/E of Microsoft was 35 and the stock price $80.25; by that Oct. 22, at the bottom, Microsoft's P/E was 24 and its price $53.50. (Thank you to Fred Hickey, editor of the High-Tech Strategist newsletter, for this statistic.) Why shouldn't that happen to a company like Broadcomundefined, which trades at 360 times trailing earnings and is unlikely to become a more profitable company than Mister Softee has been?
  • And yet, investor sentiment remains remarkably high despite the rout, as my colleague Helene Meisler noted today. We have yet to see mutual fund liquidations of any magnitude. Hardly anyone has moved to cash to have dry powder in case the market declines further. The dominant view in the market is that it is too late to go to cash, that it is merely a question of picking the right time to buy the dip, as it has been since 1982. Institutional investors are just about as fully invested as they have been since 1994, according to the researchers at International Strategy & Investment.
  • In my experience, market bottoms do not get made until people are afraid. And there is no fear out there. Have you felt shivers down your spine because you feared that all your savings, all your material hopes and dreams were about to get flushed down the drain? At the 1987 bottom, on Tuesday, Oct. 20, when it truly was a great time to buy, that's what I felt. I sense no such fear even on a lousy day like today.

Still Time for Tech Skepticism

If you are truly a long-term investor, then watching your portfolio get cut in half may not be a problem for you. Just keep averaging down. God bless you for stabilizing a weak market.

But for my money, this is still a time to lighten up on tech, keep some cash and be skeptical about all the Wall Street strategists and analysts telling you that this is the bottom and that now is the time to buy. If the next bull phase is for real, you will have time to get in. The greater risk in the market today is that if the market goes down further like

Alice down the rabbit hole.

The rabbit-hole went straight on like a tunnel for some way, and then dipped suddenly down, so suddenly that Alice had not a moment to think about stopping herself before she found herself falling down a very deep well. Either the well was very deep, or she fell very slowly, for she had plenty of time as she went down to look about her and to wonder what was going to happen next.

I fear that we, like Alice, may have plenty of time ahead to look about and wonder what is going to happen next. I doubt we have landed yet. Still looking for the White Rabbit.