Bottoming is a Process

If you're as negative and bearish as you were two months ago, then you're not doing your homework. You haven't been following the news and haven't witnessed the ascension of Obamamania. President-elect Obama is integral to getting us out of this recession. His leadership and plans for, dare I say it, economic recovery are vital to this nation and this world. Obama and his team have been saying and doing all the right things unlike the current administration. They are on top of the game and that will immeasurably aide in the process of the stock market finding a true bottom.

On top of Obama, central banks around the world are lowering interest rates. Don't underestimate the effects of low rates. Governments were worried about inflation (as mandated) a few months ago and couldn't act soon enough to stave off recession. Now that commodities and oils are dirt cheap, there's freedom to act as required. And it is required that rates be brought down to stimulate activity. Banks will be able to make gob loads of money given a certain rate and consumers will be tempted to borrow.

Also, the credit markets are slowly unfreezing. Yes, banks are still extremely cautious about lending to any Joe, and they should be. There remains a chunk of assets on their balance sheets that are hard to price, so capital requirements remain high. Heck, it may even be strategic to keep building a stockpile of dough to buyout struggling competitors in the future. Either way, the credit market is not as bad as it was just two months ago.

Housing prices are more than halfway over with the repricing. No doubt homes were expensive in the past few years. People say there was inflated demand but nevertheless the American Dream of homeownership was being played out - it will continue to be the American Dream in the future. Buyers will come back. I have a friend who bought his first home 6 months ago. There are others like him who will benefit from discipline and necessity. The repricing will allow a new, more financial savvy, bunch of home buyers in the market. And ultimately they will help stabilize and allow real long-term price appreciation. Oh, and let's not forget that low rates allow for refinancing, a boon for many struggling banks - and it benefits the consumer as well.

Many,  many more events have happened that has allowed some light to shine thru the tunnel. We're certainly by no means out of the dark yet. Long way from it. But, we're not in hell anymore. Recognize it and act accordingly. History tells us that stock markets bottom six to nine months before the real economy comes back...my best guess right now is that we're bottoming over the next 3 months.