A First Peek Into 2009's Market

Christmas is over, and the refrigerator is stocked with enough leftover turkey, ham and pie to last me until the end of the financial crisis. If it doesn't, the leftover hooch form the annual Christmas Eve party should be enough to dull the pain of the economic conditions.

Now that the holiday shopping season is behind us, it is time to start looking forward to 2009 and what that may bring for investors and traders. As everyone scurries to return the ugly ties and broken electronics they got yesterday, I want to share my thinking for the new year and my best ideas for 2009.

I believe the first quarter will be a tough one for investors. The earnings reports that come in February will be brutal, and I do not believe that is priced into the market yet. All the market analysts surveyed in Barron's a week ago had estimates for S&P 500 earnings ranging from the low 50s to the mid-60s for 2009. I believe the low end of the range is going to be proven true, and at some point in the first quarter we will see a 6-handle on the 500.

I believe we will also see Treasury yields begin to rise in the quarter as the market begins to absorb the implications of the massive stimulus package that should become law before the end of January. Real estate is going to remain relatively weak in the first half of the year, but I believe there is a good chance we see some signs of stabilization in the second half of the year. It is going to be another tough year, but there will be opportunities for patient investors and astute traders. ...