Mauldin's 2009 Piece Worth Reading

With Friday's rally, the concensus seems to be that the October and November lows were the lows-- they might be re-tested after a first quarter rally, but they'll hold.

I hope so, but hope ain't a plan. And while I'll write later about why I don't like recent action, John Mauldin wrote what I thought was a thoughtful, balanced article on the outlook for this year: 2008-- Annus Horribilis, RIP

Now, this email service of his goes out to over a million people so maybe you already saw this. If not, give it a read... he highlights well why contractions coupled with/caused by financial system chaos end up being deeper than folks seem to be banking on currently, and he shows why the market is actually still expensive (19 P/E) when using still-adjusting earnings estimates.

Mauldin's no perma-bear, though, and he did also include this one ray of hope from Bill Fleckenstein, for my money the smartest and most thoughtful of the bears:

I had a long conversation with Bill Fleckenstein today. Bill runs a short-only hedge fund and has done so for many years. He is one of the more outspoken and well-known bears. And he told me that he is closing his short fund. Shutting it down and sending all the money back.

"Right now, my list of stocks that I want to be long is longer than the list I want to short." In the current environment he wants the ability to go long as well as short. For those of you who are long the market, that is probably as good an indicator as any that we are closer to the bottom than we are from the future top!

Interestingly, we agreed on a possible scenario for the first half of the year. We both see a very tradable rally going into spring. Then, when we get even more earnings disappointments at the end of the first quarter and warnings at the end of the second quarter, we could see another test of the November 20 lows. Earnings disappointments are the catalyst for protracted bear markets. But the wild card is the coming economic stimulus package. We have never been in a situation like this.

Interestingly, even these guys see a first-half rally with a re-test of the lows. Again, I'm leery, but more on that later...for now, use the link above to give Mauldin's 2009 outlook a read (actually, this was just the preview of his '09 outlook, which is coming this week!). Worthwhile.