Posted By:
Charlie BarokasJeff,
I agree with everything you say with regard to how ugly the credit situation. Where I disagree is... that the Stock market is forward looking and a discounting mechanism. Stocks bottom before the pain of main-street subsides.
Sentiment is horrible and usually a good contray indicator...as soon as a non-wallstreet person can articulate the investment thesis..in this case the horrible metrics of the credit bubble...the turn in the market is quick to follow.
How many people felt comfortable espousing the investment thesis of internet companies in March 2000? Every time I went to the gym I was stopped by somebody who had a lock internet stock tip. That type of certainty amongst the retail investor and the media usually is followed by a turn in the market.
Aside from stocks being down...the confidence the retail investor has in Gold and Oil and all other alternatives to the US Stock and currency markets feels very mature.
I will take your bet and say that most financial stocks will be higher 6 months from now...we can use the XLF which is a basket of all financial stocks.
In the spirit of "Trading Places" I will bet you 1 dollar. 
CB