Historic Profit Opportunities Ahead

This is a historically bad time for the economy and the stock market. And we're not out of the woods, yet. In fact, the first quarter of the new year will probably be much uglier than anything we've witnessed up to this point. That's the bad news. The good news is that the bottom is in sight. Check out today's Rant to learn when I predict the market will trough, and to find out what you need to do to position yourself for the historic profit opportunities that will present themselves in the coming months.

Toby

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Market Nearing a Bottom

I know that investing in the stock market right now feels like walking through a minefield wearing giant clown shoes. Every move you make has the potential to blow up in your face.

This is the fear that grips most investors, but it's time to get over it. Your wealth and its continued growth are at stake.

So, here's a kumbaya moment to help you: Things are going to get worse before they get better.

I can almost hear you saying, "Eh, Toby, you call that a kumbaya moment?"

Yes, I do. Because I know that most investors are in a type of grieving process over the implosion of their net worth -- and most of them are going to miss out on the stock recovery because of it.

I want to make sure you're not one of those poor saps.

Managing Your Economic Grief

Perhaps you're familiar with the Five Stages of Grief as defined by the Kübler-Ross model. These stages, which come from Elisabeth Kübler-Ross' 1969 book, "On Death and Dying," explain how people deal with grief, tragedy and loss (e.g., job, income, freedom).

As an investor, you'll likely have to go through all five stages below before you are emotionally ready to get back in the market.

1. Denial -- "This can't be happening!"

2. Anger -- "Why me? It's not fair!"

3. Bargaining -- "Just let me get back to even, and I promise I'll cash out!"

4. Depression -- "Screw it. I'll never get back to where I was."

5. Acceptance -- "It's going to be OK. Let's move on and make it back."

I want to make sure you get to the acceptance stage before the majority of people hit it, because that's how you're going to get back what you lost and get ahead.

Historically Bad Q1 Ahead

The U.S. economy will endure and come out of this debacle stronger for it. There is only one end to the world, and this ain't it! It may feel like it, but it's not.

And this is going to happen sooner than most people think. In fact, I believe we're currently in the bottoming process and that the market will bottom sometime in the first quarter.

That is not to say that the worst is behind us. In fact, I think the worst is still to come.

• This pre-announcement/earnings season is going to be historically bad. Expect to see much more of what we witnessed with Intel's (INTC) sell-off following its disappointing pre-announcement.

• The unemployment level is also historically bad. But as bad as things seem with the recent job cuts at Alcoa (AA) and the ADP Employment Services report of 693,000 jobs lost, unemployment will get worse from here.

• The American Association of Individual Investors (AAII) sentiment poll shows a historically high bearish/neutral outlook -- more than 80% last week -- for private investors over the next six months.

• The market will bounce around, and it is likely that we will see a retest of the November lows.

But remember what I said before: Things are going to get worse before they get better.

Get Prepared For the Bottom

What the market needs for a sustainable bull rally is for economic conditions to trough --i.e., stop getting worse. And we are almost there.

• The "negative wealth effect" shock of collapsing stocks and home prices will eventually wear off -- that's human nature. The majority of Americans will re-emerge as normal consumers. (OK, minus a few hundred thousand homes, but, for the most part, things will be back to normal.)

• Because companies are forecasting such poor earrings in 2009, only the truly lame ducks will not be able to beat them.

• Unemployment is a lagging indicator. All new bull markets start long before job destruction peaks.

• The Fed has made it clear that it's finished with incremental moves. It's now committed to major action in the neighborhood of trillions of dollars, not billions.

• Everyone hates stocks, which is what needs to happen before a bottom can be reached. Only the pathologically bullish investors -- and the Warren Buffett types with decade-long investment horizons -- are left.

The bottom line is that, between now and end of this ugly first quarter, we are on track to hit a real economic trough -- i.e., an end to the economic deceleration. That means that it's getting close to the time to be aggressively buying stocks.

I know that is a scary step to take after what we've just been through, but if you take too long to reach the acceptance stage of the grieving process, then you will miss out on the biggest, easiest gains. By the time the recession is declared over, the market will up 40%-50% off its bottom.

So it's time for investors to begin to alter their mindsets and start viewing big down days as buying opportunities.

If you're not at the acceptance phase yet, you need to get there quickly. The world is not ending. The policy-induced "reflation" of the United States and other G-7 countries is going to happen (whether you agree with the massive Keynesian stimulus or not).

At ChangeWave Investing, we have a list of companies that we want to own for the next bull run, and we plan to aggressively add to that list during the next few months.

These are historically bad times, and things will get worse in Q1, but that also means that there will be historic profit opportunities for the investors who take the plunge.

Toby

P.S. I hope that you decide to take the plunge with us at ChangeWave Investing, but moving on to a different subject, I have a favor to ask of you.

I have teamed with Lending Club -- a social lending network --to promote a simple-but-powerful idea: Let's "uncrunch" the consumer capital markets for deserving Americans by promoting social lending networks.

The idea is called "Uncrunch America," and it is an innovative way to get thousands of Americans back on their feet. This peer-to-peer network allows lenders like me to loan money to creditworthy borrowers at fair interest rates, which contributes to the restoration of the economy.

Uncrunch America has been nominated by Change.org to be among the top 10 best ideas for change in America that the organization will present to the Obama administration. The 10 winning ideas will form the basis of a nationwide advocacy campaign to turn each idea into actual policy and lobby for it.

But we need your votes. This is an idea whose time has come, and a push by Change.org would be a huge step in the right direction.

Please take a second to go to their site and vote for Uncrunch America.

Thanks a million!

Ben Bernanke Woke Up Last Night in a Cold Sweat

Imagine standing alone, facing your country's worst financial crisis in 80 years, putting on a brave face … biting your lip … fighting back tears … as you stare into the black abyss.

So, what does Ben know that you don't?

Keep reading to find out.

Watch 'Bulls & Bears' on Fox News

Be sure to tune in to Fox News Channel this weekend and join Toby and the crew on "Bulls & Bears" for their weekly market roundtable as they kick off the Fox News Channel business block on Saturday, Jan. 10, at 10 a.m. Eastern. ("Bulls & Bears" replays at 4 p.m. Eastern, Sunday, Jan. 11, and 4 a.m. Eastern, Monday, Jan. 12.) Or you can catch the show Saturday evenings at 6 p.m. Eastern on the Fox Business Network.

Join ChangeWave at the World Money Show

Join ChangeWave and InvestorPlace Media for the World Money Show, Feb. 4-7, at the Gaylord Palms Resort in Orlando, Fla.

You'll learn how to position your portfolio for safety and growth in this troubled market.

Don't wait. These tickets go fast. Register online or call (800) 970-4355 and mention priority code 012622 to get your free tickets today.

Wine Find: An Inexpensive Vino You Can't Afford to Miss

One of the most amazing wine lists I have ever seen is in Scottsdale, Ariz., at the Kazimierz World Wine Bar.

Peter Kasperski, the man behind the wine at Kazimierz, is a wild and crazy restaurateur and wine lover extraordinaire. Check out his wine list of 3,200-plus wines.

At his wine bar last week, I had a Spanish wine from the Jumilla area that tasted so much like my beloved Vega Sicilia that it blew my mind. It was the 2004 Pico Madama Monastrell Petit Verdot.

And considering you can find it for as little as $20 per bottle, while the Vega Sicilia will run you a couple of hundred, it's not to be missed.

This Monastrell and Petit Verdot blend has an opaque, deep purple color with a strong smoke aroma. It is a very full-bodied wine with flavors of blackberry, black currants, licorice and a hint of mineral from the limestone soil. This layered wine should last for another decade.

To share your favorite wine or food experience, e-mail me through the form at www.changewave.com.