The stream of headlines and economic data pouring out of Wall Street--from the Russia-Georgia conflict to falling oil prices to a shrinking deficit to more writedowns--has shaken up investors.

And the market is responding. Here's what I expect to happen:

• Are we through the bad times? No, there is still a lot of bad news set to hit next year. I think it's important to name these market ogres now, recognize that they are on their way and then plan to profit around them. Here's the primary issue that will likely impact U.S. markets over the next year: The Alt-A mortgages based on stated income ("liar's loans") will reset--a problem 5X the size of the subprime mess.
• The Option ARMs that allowed people to make a minimum payment less than the interest due will blow up in a big way in 2009 and 2010, sinking big banks like Washington Mutual and Wachovia.
• Banks are tightening credit requirements that squeeze their customers--this could lead consumers to cut spending or even stop paying back debt.
• A whole generation is losing its FICO scores for the next 3-7 seven years, so the credit economy is history.
• And I expect General Motors, the quintessential U.S. manufacturing company, to declare bankruptcy before the end of this year.

Please note that the above problems will hit sometime in 2009, but I think we could see a big bear market as early as next April. What we need to focus on is that the next 9 months won't likely get much worse for the economy. That means the stock market should continue its relief rally and offer truly fantastic wealth-building opportunities for smart investors. But stay alert--the market's job right now is to shake off all the bulls so it can shoot up and kill all the bears.