The S&P 500 index already has dropped 11 percent from its May 20 record high, and many analysts say more is to come.

That's bad news for individual investors and could help drive them away from stocks for years, says ace hedge fund manager Doug Kass, president of Seabreeze Partners Management.

He lists several factors that could repel investors from equities in a commentary on TheStreet.com:

• "The Ongoing Bear Market." The stock drop was preceded by a plunge in commodity prices that has sent major indices to 16-year lows. Oil prices have hit six-year lows. "Big Oil and others hit by this bear market are often mainstays in retail investors' accounts," Kass writes.
• "A Broken Market Mechanism. The market's mechanism has been virtually destroyed by increased and more-costly regulatory burdens," Kass says. "These serve to limit dealer inventories in numerous asset classes and impair market liquidity, creating a vacuum that's taken up by leveraged ETFs and high-frequency trading strategies."

Meanwhile, the stock plunge doesn't necessarily make equities a good buy now, experts say.

Even after Monday's sharp drop, the market's price-earnings ratio totaled 16.8, 7 percent above its 10-year average of 15.7, according to FactSet Research. That doesn't exactly inspire great confidence in a market rebound.

Robert Shiller's cyclically-adjusted P-E ratio, which includes 10 years of earnings, stands at 24, well above its historical average of 16.6.

“When we are this high, even with this pullback, the track record of future returns isn’t all that good,” Nicholas Colas, chief market strategist at institutional brokerage firm Convergex, told The New York Times.

“The last two days have been a wake­up call for a lot of portfolio managers. It forces everyone to reconsider their base assumption for things like earnings growth and revenue growth.”

As of Aug. 6, 56 companies in the S&P 500 had issued negative earnings guidance for the third quarter, while only 22 had issued positive guidance, according to FactSet.

The S&P 500 stood at 1,898.90 Wednesday morning, up 1.7 percent from Tuesday's close.

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