Like many money managers, Mr. Gross is a conservative  he describes himself as a “Reagan fan from way back”  who generally prefers limited government involvement in the markets. But he and others say that the government’s sweeping intervention into private industry and in the markets, though sometimes flawed, is necessary to prevent a collapse of the financial system. They are hoping that policy makers do even more to stimulate the economy and revive moribund financial markets.

Given the damage in the markets, however, policy makers face daunting challenges.

“When we have bear markets, they usually take twice as long to get down this far,” said Robert C. Doll, vice chairman of BlackRock, the big investment firm.

The markets have become incredibly volatile, especially since Lehman Brothers sank into bankruptcy in September. Since then, the S.& P. has moved more than 5 percent in either direction on 18 days. There were only 17 such days in the previous 53 years, according to calculations by Howard Silverblatt, an index analyst at S.& P.

Diversification  the idea that it is unwise to put all your eggs in one basket  did not pay off for investors in 2008, casting doubt over this cornerstone of modern investing. The American market was far from the worst hit in 2008. Stocks fell 55 to 72 percent in the so-called BRIC economies  Brazil, Russia, India and China  that were darlings of the late, great boom. Stocks in developed European and Asian markets also fell sharply, though less than their emerging counterparts. Many commodities like oil and copper crashed.

Losses in the credit markets, which are at the heart of this financial crisis, appear small relative to the devastation in other markets. The International Monetary Fund estimated in October that banks and other investors would suffer $1.4 trillion in losses on loans and securities, a loss of just 6 percent. Financial institutions globally have already reported $1 trillion in write-downs, according to Bloomberg.

The I.M.F.’s estimate, however, does not count losses on derivatives, those complex instruments that derive their value from other assets. Losses on these instruments could outstrip those in the so-called cash markets because they are much bigger than their underlying assets.

A spokeswoman for the I.M.F. said the fund’s estimates did not include those losses because they were transfers of wealth from one party of a transaction to another. For example, when the insurer American International Group loses $1 billion on a credit-default swap, a type of derivative, it makes payments to customers like investment banks.