Call me contrarian (because I am), but I think the recession  - and yes we were in one despite what the government did or did not say - is pretty much over. Why do I think this? When the ‘what to do about it’ chatter finally hits the mainstream, there’s not much downside left to go. The non-financial media is habitually late to the party….though the financial media isn’t much better.

Anyway, check out this Yahoo home page headline…it says it all.

My confirming evidence actually came last week, when Ben Stein published a somewhat-related column on the Yahoo Finance page…”Bear Market Advice”.

I like Ben as an actor. And, perhaps as an economist he’s fine (though sometimes his cause-effect models are a little questionable to me). As an investment advice-giver though, I think he’s dangerous. He’s been giving the old ‘buy indices now’ sermon for the last several months, and the market has been falling the entire time.

Last week he finally came around to say we’re in bear market territory. When someone of his status goes down with the ship beating the “we’re ok” drum the whole time, and then finally switches gears when the boat is at the bottom of the ocean floor….well, you know where I stand.

I still wonder if there’s one more good pullback in store for stocks. I thought there was; now I’m not entirely sure. Of course, ‘good pullback’ can mean different things to different people. For me, it meant we were going to make new multi-year lows one more time before starting the next bull market. Like I said though, now I’m not as sure.

That being said….

If I think the economy is on the mend, then how can I think stocks have one more bearish leg to go before hitting their ultimate bottom?

Easy - stocks don’t trade at what they’re worth. Stocks trade at what investors feel they’re going to be worth about six months from now. Of course, that feeling changes almost every day. Thus, fluctuation, as new data is incorporated all the time.

The economy is much bigger than that though. When it turns, it turns for a long time. The day-to-day noise may affect investor opinion, but the ‘economy’ is unfazed by the daily news.

Eventually the economy will send stocks higher once and for all. In the interim, I foresee one more dose of bad news giving investors a reason to sell.

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