This bear market started in October of 2007 and continues to this day. Apple lagged behind just a bit, as it peaked in December of 2007, but to this day Apple is in lock step with the markets’ fall. For Apple, there were many accomplishments, as it established a new mobile platform and new Macs across the board. But it wasn’t with out it’s hiccups, like the snafu resulting from the releases of the iPhone SDK and Mobile Me. But there were also great successes, like the iPhone App Store, world-wide penetration of the iPhone in 70 plus markets, and the huge gains in Mac market share.

But for all of the Apple successes, nothing could trump the total demise of the financial and commodity markets. Credit is frozen around the world, and demand for products and energy have disappeared, as we have slip into a deep recession, perhaps even a depression. Housing has also taken a huge hit, nearly 30%, and it’s forecasted to take an equally large hit in 2009. It is unlikely that we will see any kind of recovery until we’re well into 2009, perhaps even into 2010.

The past week trading volume has dried up as many investors have closed their books for the year. Normally, due to the seasonality, we would expect a rise in the markets, and especially with the light volume, one would think it easier to move the markets up. But they have barely budged. I would expect pretty much the same as we head into the new year.

There is little to look forward to from an investors perspective. Things are worsening around the globe, as layoffs mount, businesses are failing and bailouts are having little effect. We should probably expect a counter rally at some point, but I fear we’ll see a retest of the November lows before that occurs. If we lose the November lows, then we could be in for further declines that might last well into 2009. If the market can catch a bid, then the oversold conditions and strong divergences that should develop will fuel a strong counter rally.

I have been calling for a heavy or all cash position since early September, especially with the volatility at historic highs. Hopefully you have followed that stance and saved the 40% to 70% declines that many have suffered. Our stance here in the Wilderness has been Capital Preservation First, Maximum Profits Second. I would normally reiterate that cash position going into 2009, even though volatility has dropped off dramatically. The fact of the matter is that it’s still very high. But I believe a move to gold and silver, as well as foreign equities with strong dividends, will pay better as the inflationary effects of all the bailouts starts to take hold.

The thing I fear the most going into 2009 is the value of the dollar dropping. It has already fallen 20% off its peak, and it’s setting up to fall much further. For that reason, I believe it will be very difficult to find US equities that have significant upside potential. So, even though I would expect to see many strong rallies, overall I think the markets will struggle and move sideways for the next couple of years at least. So, as much as I love Apple, I really don’t see much upside potential for this stock, or most other stocks, especially tech stocks, for some time.