Scenarios. Mr. Positive.

Time now to be Mr. Positive. I mean I can't have readers wanting to jump off a building someplace. Since we put out what could be the worst case scenario yesterday, today we'll describe the exact opposite and from our point of view a more probable likelihood. In other words what if everything goes right. Consider this possibility.

The U.S. & world economies prove to be more resilient than most investors assume. The new Obama Administration hits the ground running with a "100 day" economic plan that is embraced by both Democrats & Republicans. It's chief components are some sort of mortgage relief & government infusion of capital for what are considered key industries such as autos and the airline industry. Instead of a monetary stimulus package large amount of capital is spent on infrastructure and alternative energy. There is no tax increase but there is no tax decrease for individuals in 2009. Obama is lucky where President Bush never was in the fact that he manages to have a first two years free of large foreign or political crises. It is apparent by late spring 2009 that the economy has bottomed and housing prices have stabilized. Unemployment which shot up to almost 8% in the first quarter of 2009 levels off. By early summer evidence of this starts to show up in the Government's statistical data. The 1st quarter of 2009 proves to be the the trough in corporate earnings. 2nd quarter numbers while still negative show a sequential improvement in results. By mid summer optimism that the economy has weathered the worst of it starts to seep into the investment community. Stocks which have spent about nine months trading between 850 and 1100 on the S&P 500 start to trade up as investors start to discount the possibility of a recovery by the end of the year. The S&P 500 ends the year trading around 1275. An approximate 35% increase from where are currently trading.

Now I'm not saying this is going to happen either. I do think it is a more likely scenario than a further economic disaster. I also think that when stocks start to recover investors will be shocked at how violently and rapidly they start to advance.