Recent signs of stabilization are the "mother of all head fakes," T2 Partners head Whitney Tilson said.

Mortgage modifications aren't working and foreclosures will continue to soar, Tilson said.

And though fraudulent and subprime mortgage problems are largely behind us, there are three more waves of mortgage defaults to come: Prime loans, jumbo loans, and losses among loans outside of housing, most of which will be in the $3.5 billion commercial real estate sector.

Despite all this bad news, Tilson sees some good opportunities for investors.

“Stocks of some of the greatest businesses with strong balance sheets and dominant competitive positions are trading at their cheapest levels in years,” he said.

Slightly more adventurous investors can find great companies in out-of-favor sectors such as financials, retailers and healthcare.

“We own Berkshire Hathaway, Wells Fargo, American Express, Pfizer, and Target,” he said. “All are great businesses but their stocks have suffered mightily thanks to the economic downturn.”

Talk of economic upturn is definitely premature, New York University economist Nouriel Roubini said.

“The June employment report suggests that the alleged ‘green shoots’ are mostly yellow weeds that may eventually turn into brown manure,” Roubini said.

“It’s clear that even if the recession were to be over anytime soon — and it’s not going to be over before the end of the year — job losses are going to continue for at least another year and a half.”