Like most other investors, my expectations for 2008 have been dramatically reduced. It's very likely that we won't see any new uptrend in stock prices perhaps until after the Presidential election.

As I've written before, it isn't that there is a lack of fast-growing, exciting companies in which to invest, only that the stock market's enthusiasm for speculating on such shares is diminished. Stock market events over the last several months illustrate quite clearly that stock prices move up and down based on investor sentiment and investor psychology.

I've always contended that a speculator in stocks will be far more successful over time mastering the psychology of the stock market, as opposed to spending more time crunching individual corporate data. You can have a great company trading at a very attractive valuation, but if the broader market isn't interested, the stock isn't going to go up.

Alternatively, you can have company in a lesser financial state that gets overvalued on the stock market because investors perceive its success to be greater than it is. Obviously, nothing lasts forever in the stock market (or in life, for that matter), so an investor's ability to get a defined sense of what the broader market is interested in is a clear edge when speculating in stocks.

Solar energy stocks are a perfect example of a stock market sector that is extremely difficult to valuate from the analyst's point of view. How do you attribute a reasonable valuation to a company that has one hundred million dollars in cash in the bank and whose sales are expected to double in each of the next three years?

This brings me to another point that it is extremely important. I view virtually all equity securities as highly speculative and appropriate only for risk-capital investors. Everything in the financial markets goes through periods of positive and negative enthusiasm. You can therefore be successful in trading stocks as opposed to investing for the long term. What's crucial is to be flexible in how you approach your speculating. As times change in the equity market landscape, so must your business plan as an investor. Successful investing isn't a one-off strategy. It's like being in retail; you just can't sell a product that people don't want. You've got to do what works as the landscape changes.