Regular readers of my commentaries will recognize what by now should be obvious to the astute investor: The "good news" of the last few months, at least according to Wall Street's shameless cheerleaders, has been exaggerated.

I do expect the stock market to decline in the medium-term, but please remember that there is an equal risk that the "bad news" will be overblown as well. Knowing the difference, and how to invest in a market of rhetorical extremes, is the key.

To review, here are some important points to keep in mind for the next few months of market moves:

Over the past several months, countless stock market pundits have told investors that they should add to their stock portfolios because, they contend, "stocks are cheap." This rear-view mirror mentality, common among self-interested Wall Street analysts, will cost you money.

My research indicates that corporate profits for S&P 500 companies fell during Q4 2007, and that — this is important — corporate profits will continue to fall during the next two quarters. I therefore expect stock prices to fall sharply over the next few months.

The major U.S. stock market indices experienced their worst pre-presidential election year since 1987 over the past 12 months. Again, my models indicate that stocks in general will continue to perform poorly during the first half of 2008.

If my models are correct, I expect the stock market bears to dominate the news headlines during the first quarter of 2008 and for even the most bullish money managers to throw in the towel and admit that a bear market has begun.

However, patient investors will be presented with some tremendous investment opportunities in the second half of the coming year.

Once financial institutions clean up their balance sheets — and stocks of financially-sound companies have been beaten down to ridiculous levels — my experience suggests that astute bargain hunters will begin to bid up stock prices during the second half of 2008.

I expect economic growth in China and India, both of which rely heavily on the U.S. for exports, to slow during the first half of next year. Nevertheless, I expect both of these countries to continue to grow at healthy rates over the coming years.

Commodity prices in general, according to my research, will rebound later this year, after falling during the first half of 2008 as a result of declining demand from the U.S. construction and manufacturing markets.

I am not a "permabear." Rather, I'm an opportunist who strives to earn profitable investment returns during both bull and bear markets while always focusing on managing downside risk.