Somebody Pinch Me

Well, we blew through the November lows, as I've been saying for some time that we would, and this week the Dow (DJI) dropped below 7,000 for first time since 1997. And don't think the stock market's decline is going to stop there. The asset deflation death spiral we are trapped in feels like a bad dream we just can't wake up from. Our worst fears are now being realized. Check out today's Rant to find out what they are and to learn what you must do to survive this depression.

Toby

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Our Worst Nightmare Has Been Realized

The scorecard is in and it's official: Fifty percent of all the stock market wealth that's been made since 1933 is gone!

But the losses won't stop there. I anticipate further declines of perhaps another 25% from today's level.

The collapse of our investment banking and "shadow banking" systems (i.e., GSEs, SIVs, private equity, hedge funds, etc.) that account for more than 75% of all lending and financing in the United States up to 2008, pushed the economy and the stock market off the deep end.

This historic, financial system ChangeQuake has unleashed the most powerful deflationary economic tsunami of the past 70 years. And it's this deflationary wave that caused me to lower my fair market valuation for the S&P 500 (SPX) to the 500 to 550 range -- based on 11 times 2009 earnings of $48 to $52 per share.

The historic bear market trough for the earnings multiple is 11 times, which would mean a decline of 25% or more before we reach the "all hope is lost" bottoming point. And like all real market bottoms, this one will be marked by a historic aversion to stocks. Almost everyone will be in cash, and the ratings for CNBC and Fox Business will drop as people turn off financial TV.

At that point, nobody will be calling a bottom (though many people undoubtedly will be crying "uncle!"). Folks, it's going to get as bleak as you've ever seen, unless you're more than 80 years old and lived through the Great Depression.

Keep reading today's Rant to learn why our worst fear is now being realized and to find out what you must do to survive this depression.

Make Sure Your Portfolio is Saving You Money

Its tax time again!

And that means it's a great time to think how best to manage your investment and trading accounts for 2009.

Trade Tax-Free

If you're like many investors and traders, you find that an IRA is the perfect vehicle for trading stocks and options. You defer taxes and keep more in your account.

And if you have a 401(k) and you've left the company, it's a good time to think about rolling it over to an IRA for the flexibility it gives traders.

Take a look at the special message below from our friends at optionsXpress -- they're making it easier for you to trade tax-free.

Move your IRA or roll over your 401(k) to optionsXpress and receive $500 when you transfer your account by March 17. Click here now.

March 17 isn't that far off. Make the move now while you're thinking about it.

Toby

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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, March 7, at 10 a.m. Eastern. ("Bulls & Bears" replays at 4 p.m. Eastern, Sunday, March 8, and 4 a.m. Eastern, Monday, March 9.) 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.

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Wine Find: The Vintage of the Century

2005 Bordeaux was the vintage of the century, and it was priced like it. But now there are some great 2005 vintages out there for less than $20!

Here are a few that I have tasted during the past few weeks that have the velvet-soft mouth and big, black fruit taste that we love in Bordeaux Cab, Merlot and blends.

Chateau Beynat Bordeaux Blend -- $18 per bottle.

Chateau Thieuley Bordeaux -- $16 per bottle.

Chateau Peyraud Bordeaux Blend -- less than $10 per bottle!

P.S. Don't forget to reserve your spot for the 2009 ChangeWave Wine, Dine and Stocks Tour to the glorious Provence region of Southern France, Oct. 11-16.

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

Lock your place in NOW, so you are guaranteed a spot. To get more information and make your reservation, go to www.changewaveseminars.com.

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