Kass: Fear and Loathing on Wall Street

We almost certainly remain in an exquisite trading market but an unimpressive investing (buy-and-hold) market for numerous reasons, including the great unwind of debt, the hit to household wealth and psychology after the deep drops in home and equity prices, the unique nature of this cycle's synchronized world economic falloff and the uncertainty of policy. Thus, a sustained market advance remains a low probability.

While much economic and corporate ugliness can and will likely occur in the year ahead, if year-end 2009 does mark the beginning of the end of The Great Decession, as I have surmised, stocks over the next few months will likely begin to discount stabilization well in advance, especially given the reasonable levels of valuation addressed previously.

To conclude, the lowering of the bar could be closer than many think, but the path to reach it remains icy, so investors should still tread carefully.

Despite the fear and loathing on the part of investors, I am beginning to find value and, for the first time in several years, I am in a (slightly) net long position.

Gun to my head, my baseline expectation is that the S&P could end up with a mid- to high-single-digit return for the full year, or about 15% above current levels.

Many stocks will rise more dramatically.

Color me a bit more bullish.

Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.

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