During this Christmas season there are unfortunately a lot of negative headlines.  There is the trade war, Brexit, Fed uncertainty, slowing growth, White House drama, investigations, Russia’s bad behavior, and a ballooning deficit.  I could list more.  Those have taken a toll on the stock market, which has given back 14 months of gains. 

It’s always easy to be negative because those stories are happening here and now.  But there are many positives, too, for those who see the glass as half full.  On this holiday week, I’m going to be upbeat. 

Let’s consider the horrendous 2008-09 financial crisis.  While almost every investor looks back at that period as a painful time of portfolio losses (it was), optimistic investors remember it as the best buying opportunity of their lifetime.  Many stocks, such as Visa, Nike, and Starbucks, traded in single digits.  Apple was $12! 

Now to the current market, which closed at a 52-week low on Tuesday.  The last time that happened was October 2011.  One year later the S&P 500 was up 30 percent.  Three years later it had gained 80 percent.           

What about before that?  Michael Batnick at Ritholtz Wealth Management examined what the market did after reaching 52-week lows.  Looking at the 427 lows since the late 1920s he found that one year later the S&P 500 wasn’t any more likely to have gains, but when it did have a gain it rose an average of 24 percent.  He also found that stocks were more likely to make big moves, in both directions, after reaching a 52-week low so expect volatility to continue.  There’s more:  Stocks were higher three years after a 52-week low 86 percent of the time.  Time is always on the side of the bulls.

There is a fundamental story as well.  From a valuation standpoint, the much-anticipated slowdown in both GDP and profit growth next year is working its way into stock and bond prices.  To a good degree prices had already reflected that.  For example, yields on bonds and preferreds didn't reflect the multiple rate increases the Fed was projecting.  The economy will slow, but it won’t move from growth of more than 3 percent this year to a contraction next year. 

As for earnings, most strategists expect earnings to increase 5 to 8 percent in 2019, which means the S&P 500 trades at 14 times earnings.  That is not overvalued.  On the contrary, that P-E multiple is a bit lower than its historical average.  Have a Merry Christmas.