RealMoneyMy new column is up at, titled Cult of the Bear, Part I. Its the first of a 2 parter outlining the Bear Case for 2006.

The title jokingly refers to Noah Blackstein’s name calling the last time we were on Kudlow together. Noah runs the Dynamic Fund (stuffed with high beta names like Apple and Google — which is why he outperformed nicely last year).

Before you read the column, allow me to clear a few things up first: I don’t know what’s going to happen next year. Neither do you; nor does anyone else, for that matter. Further, I don’t believe in forecasting – for most investors, it’s a distraction from managing risk and finding opportunities. And, I’ve long ago dismissed the terms Bull or Bear as irrelevant labels.

So if that’s the case, how did I end up as the very lowest market prediction in the 2006 Business Week market forecasts?

Here’s the story:

"As 2006 begins, I’m at the bottom of the barrel, bringing up the rear, and the proverbial low man on the totem pole … and I’m not talking about being in the doghouse with the Mrs. for excessive partying on New Year’s Eve.

Rather, I refer to having the very lowest market prediction — and by more than 2,000 Dow points (!) — in the 2006 Business Week market forecasts.

In this column and one to follow, I’ll describe my top down, macroeconomic process, and how I derived my improbable forecast. I’ll also review some market history and explain how, after all the arguments have been made, these long-term charts reveal the most compelling reason to be cautious on U.S. equities into 2006.

If I were a weatherman, my forecast would be 50% chance of heavy showers — despite the "sunshine" that greeted investors on the first trading day of 2006."

Let’s start the perilous prediction process with the question “How?”


Cult of the Bear, Part I, 1/5/2006 7:18 AM EST

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WSJ: 2005 Markets Scorecard

Its not just the NYT that has a great graphics department — the WSJ has put out their fair share of terrific charts (as this blog has long since demonstrated).

Here’s the WSJ Market Scorecard for 2005:   

"U.S. stocks took a backseat in 2005. Big gains in oil and gold drove commodities prices to a second-straight banner year, while the Fed’s faithful campaign to raise interest rates made bond yields the talk of Wall Street. Here is a scorecard for major financial-market indicators:"

The graphs are actually too wide for my layout, so they require a 2nd click . . .

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