Why Stocks Will Fall

This column was originally published on Street Insight on Jan. 8 at 8:08 a.m. EST. It's being republished as a bonus for TheStreet.com and RealMoney.com readers. For more information about subscribing to Street Insight, please click here.

I didn't need Bob Dylan to remind me that you don't need a weatherman to know which way the market's wind has been blowing.

Well, maybe I did during the last half of 2006, when I regularly got slapped around by the market as disbelief was suspended despite growing signs of escalating economic and geopolitical risks.

Many argue in their recent emails to me -- and I am paraphrasing the author Gay Talese (Honor Thy Father, Unto the Sons, etc.) -- that I am something of a restless voyeur who sees the warts on the world, the imperfections in companies and industries.

They argue that gloom is my game, the spectacle my passion ... and that normality is my nemesis. It seems to appear to many, based on some of their more recent communiqués, that my market observations resemble an account of the traffic on I-95 from the point of view of the accidents.

Not true.

I actually yearn for normality. To this observer, normal would be mean reversion in 2007 for home prices, consumer spending, credit losses, corporate profit margins -- and in stock prices.

Indeed, with an odd year here and there being the exception (2000-02), we have been in a bull market for the past 25 years. During that period -- and with perfect hindsight -- the best financial advice regarding equities and bonds was also the most concise: The interest rate analyst could have confined himself to saying down and the equity market analyst to saying up. ...