The State of the Market

Each year I send my friends and family my "state of the market address" e-mail. In this note, I tell them where we are and where I think we are headed in the upcoming year. Last year my diagnosis was spot on, and I know many of my friends and family members took the message to heart -- and it saved them a lot of heartache. This year, I want to share my 2009 market forecast with my WaveWatchers. While you may not like what you read, as active managers of your money, this is information you need to have.

Toby

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How to Invest for the Rest of 2009

Each year I send an e-mail to my friends and family containing my economic and stock market forecast. I send it to make sure that everyone I know understands my market forecast, why I am bullish or bearish on stocks, and what my basic advice is for building and protecting their financial wealth.

The other reason I send this e-mail to everyone is so I never have to hear my friends or family members say, "Geez, why didn't you tell me what was going to happen in stocks," when I see them on the golf course or at a dinner party.

In my January 2008 message, I made the following points:

• Our proprietary ChangeWave Alliance macroeconomic surveys showed that the United States was in a consumer-led recession.

• A bear market for stocks would precede this recession, with my worst-case scenario being that stocks would go down to 1997 valuations.

• This recession would be much deeper and longer than the 2001-02 recession, because that one did not involve the consumer.

• The financial tsunami of subprime mortgages was only the first of many waves to hit our economic shores.

My advice was to "go defensive" -- i.e., build cash and buy bear market ETFs that went up when stocks went down.

My low-end target for the S&P 500 (SPX) was 740 based on our earnings-per-share models and a normal earnings recession. That forecast took us back to April/May 1997 valuations -- i.e., wiping out 12 years of stock gains.

My forecast was not popular, but it was spot on.

What happened, of course, is the financial world imploded. And, yes, we did hit 741 on the S&P 500 on Monday.

Keep reading to get this year's economic forecast.

A Better Stimulus Plan: Make 135% in 8 Days

Here's a stimulus plan you might actually like: On Thursday, Jan. 22, I urged my Winning Edge subscribers to buy Amazon Feb 50 Calls up to $4.60. They made 135% in the next week. Find out how we did it here.

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, Feb. 28, at 10 a.m. Eastern. ("Bulls & Bears" replays at 4 p.m. Eastern, Sunday, March 1, and 4 a.m. Eastern, Monday, March 2.) Or you can catch the show Saturday evenings at 6 p.m. Eastern on the Fox Business Network.

Check your local cable listings or satellite guide to find the Fox News Channel location and times for your area. NOTE: These shows are NOT on your local Fox network station. They are on Fox News Channel on your cable or satellite system (Channel 360 on DirecTV, Channel 205 on Dish Network). Keep in mind that these schedules are subject to change, and the Fox News Channel business block and other programming may be pre-empted for breaking news events.

29 Ticking Time Bombs to Sell Now

If you own stock in Research In Motion, Hewlett-Packard, Men's Warehouse, Goldman Sachs or 25 other ticking time bombs, get out now! Some of these companies are household names, while other may not be so familiar. But they could all pose a huge threat to your retirement, your portfolio and your very lifestyle. Learn more here.

Wine Find: A Go-To Red for Less Than $10

Malbec from Argentina is the go-to red wine these days. I tasted a bunch last night at Charlie Palmer in Washington, D.C., while Obama was giving his speech.

These wines could benefit from age, but are ready to drink now, especially the 2006 and 2007 vintages.

My favorite was the Altos Las Hormigas Malbec, which retails for $9.99.

To me, this is the kind of vino that you have to love from Argentina. It's got the pepper nose and mouth that makes you want to order some wild boar ragu. This guy also has fruit flavors -- plum and blackberry -- that burst in you mouth.

All in all, for less than $10 it's an extraordinary wine.

It's Time for a Major Attitude Adjustment!

When the going gets tough, WaveWatchers take their profits and go traveling!

Some of the best times I've ever had in my life have been on our ChangeWave Wine, Dine and Stocks adventures. The next one comes along Oct. 11-16, in the glorious Provence region of Southern France.

Years ago, my wife Marjorie and I fell in love with Provence and its unique mix of cultures, foods and, of course, incredible wines. There is no other place in the world like it, and that's why we asked our travel adventure partners Hamilton Fitzjames to cook up another dream vacation and adventure for our friends and subscribers -- and have they planned a doozy of a week for us!

We'll hit all the best parts of Provence, and we'll let Tom Hamilton and his crew do all the work, as usual. Our job will be to eat, drink and laugh our way down the trail. It's a tough job, but I know we're up to it.

From the fabulous wines of Châteauneuf du Pape and Gigondas, to the incredible outdoor markets and the unique Provençal cuisine, you and yours will LOVE discovering the wonders of Provence with our merry band of food, wine and stock junkies.

We all deserve something great to look forward to in 2009, and if you have ever promised yourself that you would go to Provence some day, that day has come -- in style!

Lock your place in NOW, so you are guaranteed space. The bear market will end and this trip to Provence will be one of a kind!

To get more information and make your reservation, go to www.changewaveseminars.com.

We'll see you in Provence!

Toby and Marjorie

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