This blog post originally appeared on RealMoney Silver on Aug. 10 at 8:42 a.m. EDT.

It is clear that Jim "El Capitan" Cramer and I are in some disagreement regarding the future of both the economy and the stock market over the near to intermediate term.

Let's try to examine the primary differences so that our future polemic can be more focused.

Neither Jim nor I are econometricians, so neither of us knows exactly what trendline GDP growth will be in 2010 and beyond. We both read everything on the subject of the economy, but, frankly, we both prefer picking stocks to making economic predictions/models.

What I am relatively convinced of is that, given the nontraditional headwinds and the great debt unwind, the world's economies face an uncertain outcome, which is far less predictable than in prior recovery cycles. So any discussion of valuation loses some relevance in such uncertain times.

Jim is more optimistic, believing that the massive monetary and fiscal stimulus can get the economy back on a classical, reasonable and self-sustaining recovery.

Arguably, to me, the S&P 500 at current levels is not now pricing in an uncertain outcome; it is likely pricing in the growing consensus and Jim's expectation of a self-sustaining economic recovery (albeit a shallow one).

So, while respectful of the powerful market momentum, I would now prefer being short rather than long.

Already, it's different this time, with regard to the several-quarter drop in nominal GDP, in the magnitude of the drop in real GDP and in the unprecedented drop in household net worths.

I agree with Jim (and many others) that growth will be subpar. Where Jim and I seem to part company is that, given the headwinds, my baseline expectation is one of uneven, inconsistent and lumpy growth for some time to come, difficult for corporate managers (who no longer have pricing power) and investment managers to navigate. It might very well look like we are coming out of recession in one quarter and then one or two quarters later appear that we are going back into recession. Unlike bulls (such as Jim), I don't see "smoothness" in the years ahead, and a healthy skepticism, if not rewarded in an absolute sense, should keep an investor out of trouble and from making big mistakes in 2009 and beyond.

I have suggested (prematurely!) that this is not an outlook that provides support to a normal or outsized exposure to equities and credit, which have been the World's Fair since March when I made the generational bottom call.

I will end on the following important note. It should be recognized that Jim has been very right about a continued market rally, and I have admittedly been way wrong!

Stay tuned!

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.

At the time of publication, Kass and/or his funds had no positions in the stocks mentioned, although holdings can change at any time.


Know what you own: Some of Tuesday's most active stocks in premarket trading include Freddie Mac (FRE), Citigroup (C), American Capital Agency (AGNC), Rentech (RTC), SPDRs (SPY), General Electric (GE) and CIT Group (CIT).

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Long/Short LP.

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