At this point it’s obviously impossible to predict where the stock market will find a bottom. Equities continue to break important support levels and Monday’s mini-crash is an extension of the recent October 2002 bear market low violation last week. We’re truly in no man’s land. The Dow can fall to 6,000, 5,000 or worse – who knows.

From its all-time high in October 2007, the MSCI World Index of major economies is now down almost 60% -- a record since the creation of the index in 1969. The Dow, which hit more than 14,000 nineteen months ago, is now down more than 50%.

Though it’s certainly too early to buy stocks amid a total freefall, we’re approaching the point of “maximum pessimism.” With two brutal bear markets this decade long-term stock market performance has been badly damaged with equities now showing losses since 1995. Adjusted for inflation, stocks have posted a loss since 1973. That’s not exactly the kind of news to inspire investors. Or is it?

Stocks can fall another 10% or more from these low levels; the case for earnings is poor with domestic consumption collapsing, unemployment soaring and consumer balance sheets now clearly in repair mode as the savings rate begins to rise. The historical correlation between a higher savings rate and earnings is brutally negative, meaning if consumers are saving, they’re not spending. Domestic consumption in the United States is almost 70% of GDP; without a spendthrift consumer it’s pretty hard to make the case for common stocks.

These statistics don’t augur well for equities. But is this not the point where prospective investors should be buying stocks when sentiment is downright bearish and stock mutual fund assets are now worth less than money market funds?

At some point in 2009 I think stocks will hit an historical low. At this rate, equities are plunging out of control with the Dow now down more than 45% since September alone and many foreign markets down in excess of 50%.

The upcoming market bottom will sow the seeds for spectacular short-term gains, not unlike what occurred between mid-1932 and 1936 – the last credit-inflicted bear market. Make sure you’re cashed-up and ready to go bargain-hunting once this bear market hits a low. I know it’s hard to believe that we’re anywhere near a bottom; but that’s exactly when gutsy investors should start buying. I imagine once a low approaches the economic news will still be outright bearish. I’ll do my best to guide you right here.