Now that we're past the holidays, and we have all the election and campaigning behind us and with the upcoming inauguration. I'm anxious to see what's ahead.

My money says we will have more volatility as optimism and hope are replaced by the reality of the economic downturn. Of course, smart investors aren't overly concerned with volatility, because they know to sit tight and weather the storm.

I also think there's a lot more downside to this market.

This is a different kind of downturn. Many investors have never seen anything like this before. This isn't like the pullback in the year 2000. That downturn was all about returning stock prices to realistic levels from unrealistic valuations. The economic dip that accompanied it was quickly absorbed by our relatively robust economy.

The same thing is happening in the housing market today, a return to realistic pricing levels. The difference this time is it's the average homeowner who has taken the place of the speculative investor of the late 1990s. The result of the shakeup in housing sales was a rapid pullback in spending, which has led us into economic recession we're in now. Like it or not, consumer spending is what drives this economy. Consumers today are reluctant to spend the cash they have and unable to go further into debt.

Until confidence returns, and cash becomes less valuable than the things it can buy, the economy will continue to slow and stocks will continue to behave accordingly.