Editor's Note: TheStreet.com has always believed that offering a wide variety of opinions and viewpoints -- rather than a monolithic "house view" -- helps readers make better-informed investment decisions. Today, contributors Doug Kass and Michael Comeau offer two sides of the debate on equities' direction.

Why Stocks Will Fall

By Doug Kass

This was originally published on RealMoney on Jan. 9 at 10:15 a.m. ET.

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.

The fact of the matter is that Wall Street investment strategists and analysts, commentators in the media, and portfolio managers (most of whom are mandated to be fully invested) are almost constitutionally incapable of an ursine market moment or criticizing the securities that they own. (I like to think The Edge has its own brand of truth telling and when the line between progress and fantasy appears to be increasingly blurred, I try to explain why and how I see it that way.)

While three days of trading does not make a trend, the early signs for 2007 indicate that the times might be a-changin' (toward normality), and I am looking forward to the opportunity of profiting from a more normal two-sided stock market.

Thus far in January volatility appears to be on the ascent, and the broad decline in commodities seems to be a statement of our economy's health. Although the notion of a more normal market is in the eyes of the beholder (in my case, an ursine one), we do know that normal is not ignoring disturbing signs; normal is not going without a 2% correction since July; normal is not going through a 10% correction in more than 900 trading days.

The hedge fund crowd -- many of whom invest/trade at the altar of momentum -- are now much longer than at any time in the advance, and despite last week's modest correction, the remnants (i.e., short-sellers) have more or less folded their tents. From my perch, that is abnormal, as are the aforementioned positive skeins in share prices and the general notion that cash is trash!

Why Stocks Won't Fall

By Michael Comeau

This was originally published on RealMoney on Jan. 9 at 2:01 p.m. ET.

Although I'm no raging bull on the broader markets, I feel compelled to provide a counterpoint to Doug Kass' recent column, titled " Why Stocks Will Fall ."

First, near the beginning of the piece, Street Insight's resident bear says the market got the better of him in the second half of 2006, citing suspended disbelief "despite growing signs of escalating economic and geopolitical risks."

I certainly can't argue that these risks don't exist throughout the world. In fact, things seem pretty crazy these days. If there is any sign of improvement in Iraq, I certainly haven't seen it. Iran is probably building nuclear weapons. Hugo Chavez is busy nationalizing companies in Venezuela, and Russia is cutting off oil supplies to Europe.

On top of that, there has been an explosion in hedge funds and incredibly complex derivative instruments, a decline in the housing market and a big round of rate hikes from the Fed. In addition, the U.S. still has fairly large trade and budget deficits.

However, we can't ignore the fact that, through all of this strife, the past few earnings seasons have been pretty good. Because companies have been doing fairly well throughout some fairly turbulent times, I don't believe it's crazy to think that the primary focus of investors should be earnings. We can't totally ignore the big picture, but earnings are among the most important determinants of stock prices, so for the market to fall apart convincingly, we'll need to see broad-based earnings weakness and/or a multiple retraction.

The stock market as a whole is not terribly expensive. After fairly solid performances by corporate America's largest companies over the past few quarters, is it time to declare that the good times are over? Probably not. Sure, the party will end, but as of yet, there simply isn't much indication that earnings are going to suffer in the upcoming reporting season.

Later in the piece, Kass also opines that "the broad decline in commodities seems to be a statement of our economy's health." This is a fairly bold statement. I believe it's simply way too early to imply some correlation between the near-term performance of commodities and the overall economy. Over the past few years, one could have identified any number of economic indicators and trends that might indicate a weak economy (sluggish job growth, for example) as rationalization for a bearish market outlook and lost out on substantial returns in stocks.

Finally, the author implies that the Wall Street herd is overly bullish. Wall Street is certainly positive, but I would not characterize it as overly aggressive. According to a recent Business Week survey of investment strategists, on average they expect a 5.9% gain in the Dow Jones Industrial Average and a mere 5.5% gain in the S&P 500 in 2007. Both numbers are below the historical average annual returns of stocks and below the returns that strategists expected going into 2006, when those surveyed forecasted returns of about 7.8% and 7.9%, respectively.

So is the world a crazy place? Yes. Is the economy going to implode? That's a big maybe, and there's no way of knowing if or when that will happen, let alone right now.

So until earnings stop growing, investors should focus on the financial performances of the companies they own and industry trends, because those will move their stocks the most.