Enjoy your last Christmas before the bear market

I thik I mentioned something like this a while back. I've talked about the housing bubble eventually bursting and I've talked about how the high price of oil will effect the average Americans ability to negotiate their household bills. Consumer spending took a beating this year and though Christmas promises to be fruitful, I agree with the sentiments of the below article, next year there will be some serious changes. Noww combine the natural cycle of American economic patterns with an increase in joblessness and an even greater increase in outsourced jobs. Then factor in an increase in the price of housing plus consumer goods while wages remain stagnent or decrease. No matter how you look at it, we're due for a crash and then an adjustment.

Good luck folks. Happy Holidays!

Yes, you heard me right: This is the very last Christmas before next recession and bear market. So make the most of it. Seriously, have fun, buy lots of presents (on credit), celebrate with the folks, eat hearty, enjoy the eggnog, kiss a cutie under the mistletoe, root for your favorite team on New Year's Day.

Have fun, because the party's almost over. The bets are that 2006 is going to be bad news for the market, the economy and your pocketbook. So live it up, folks! You may as well have one last big fling before reality sets in and the bottom falls out. Here's what some of America's meanest old Scrooges are saying to try to dampen your holiday spirit:

Jeremy Grantham of GMO ($135 billion assets): "Everyone agrees that there are extreme imbalances in the U.S. and the global economy ... The bulls believe that all will work out ... The bears believe that sooner or later these imbalances will come home to roost. ... The probable winning bet [is] a very mean reversal ... for the next few years."

Gary Shilling, economist: "A bursting of the housing bubble will probably be the expansion ender. Signs of the bubble's demise are accumulating, making a 2006 recession probable."

Bill Gross of Pimco ($475 billion assets): "Now after 300 basis points and 17 months of tightening -- which by the way is typical of prior bear cycles as well -- it should only be logical to expect a slower economy in 2006."

Fed Chairman Alan Greenspan: "Our budget position will substantially worsen in the coming years unless major deficit-reducing actions are taken. The consequences for the U.S. economy of doing nothing could be severe."

So how can you prepare for a bear market and recession? Forget the typical year-end articles like year-end tax planning that fill the financial press like a well-lit Christmas tree and mall bell-ringers. Preparing for a recession and bear market is not about tweaking strategies that worked in a bull market.

What will work? One more time I could launch into a reminder of the advantages of a well-diversified portfolio of no-load index funds. But you don't need more softball tools, platitudinous tips and easy-to-do tactics about stuff you already know.

You need a wake up call: Total shift of consciousness, an extreme mental makeover, a massive attitude adjustment. You're not going to play armchair war games on your new Xbox 360. This is real war. In the coming years it is going to take a whole new way of thinking for you and for the rest of America. And the best advice for getting a new mindset will never, never come from Wall Street. Remember, a bullish bias and greed are all they know! (More)