Money manager and advisor Jim Stack, who accurately sidestepped the bear market over the past year, is now turning more optimistic. Here's the latest from his InvesTech Market Analyst.

"As a bear market unfolds, investor emotions travel down a slippery slope of anxiety, fear and panic. And it is just this kind of emotional upheaval that creates some of the extremes that we are seeing now.

"Media headlines containing the word 'depression' and images like this are appearing more this year than in any year since the 1930s.

"Stock market volatility, as measured by the number of 1% daily closing moves in the S&P 500] Index, is near a record high. The percentage of stocks on the NYSE hitting new 12-month lows is higher than any previous record level during the past 50 years.

"Yet, bear markets bottoms occur right in the midst of fear and panic – at the point of maximum gloom. And for consumers, it's hard to get much gloomier: In addition, more bear markets have ended in October than in any other month.

Written before yesterday's sharp rise, stock market historian and advisor Jim Stack had forecast an "imminent bottom" for the market. A long-term timer, he is not looking for quick pops and drops; rather, the "safety-first" money manager focuses on slowing positioning his portfolio for long-term, secular trends.

Indeed, in his InvesTech Market Analyst he was among the few to accurately forecast the current crisis; over the prior year and a half, he predicated both the bust of the housing bubble and the derivatives-based meltdown that would result.

After maintaining a defensive, cash-heavy portfolio during the market's downturn, he is now becoming more optimistic, noting, "All of our bearish extremes readings that precede the best stock buy opportunities are now in place."

Stack explains, "How can we put this bear market in historical perspective? No doubt about it, this bear market is a whopper – both in size and severity.

"With a 42.5% loss in the S&P 500 Index, it is rapidly closing in on the big bear markets of 1973-74 and 2000-02. In fact, no bear market in the past 70 years has declined over 50%.

"In severity, this bear has unfolded much faster than past bear markets, wiping out $6.7 trillion in stock values in barely 12 months – equivalent to over 90% of the loss in the 2000-02 bear market in two-fifths of the time

"In measuring impact on investors' portfolios, this bear has 'repossessed' more than 84% of the prior 5-year bull market gains! Both the DJIA and S&P 500 Index are back to price levels seen over 10 years ago in 1998.

"Why has the stock market decline turned so precipitous in the last few weeks? In bigger bear markets, investors always end up throwing out the baby with the bath water.