As I wade through the mainstream financial news, two story lines are forming regarding the recent financial turmoil in the markets. The articles are trying to predict the near-term future of the stock market and cover virtually every possible outcome, with most articles falling at the two extremes - Boom or Bust. Below are some thoughts from these two camps:

The Bust Case
Paul Krugman, a U.S. economist and winner of this year’s Nobel economics prize, said the world could face a Japan-style, decade-long slump in the stock market. He called called on policy makers to spend liberally to cushion a withering global downturn. He was quoted as saying:

“A scenario I fear is that we’ll see, for the whole world, an equivalent of Japan’s lost decade, the 1990s—that we’ll see a world of zero interest rates, deflation, no sign of recovery, and it will just go on for a very extended period, and that’s unfortunately very easy to see happen. We can easily be talking about a world economy that is depressed until 2011 and maybe beyond.”

Krugman added that in his worst case scenario there would also be a series of extremely serious crises in particular countries that are in big trouble.

The Boom Case
Birinyi Associates said that if some market watchers are right and the bear market is over, this could be the strongest start to a bull run in over 75 years. Looking at the S&P 500 and assuming that 750 marked bottom, Birinyi argues the index has shown its strongest advance for any 11-day start to a bull market since 1932.

According to Jeffery Rubin, an analyst at Birinyi Associates, believes that that the markets have turned bullish is beyond question. his firm uses factors like money flows to gauge market psychology, to discover what kind of bull market this may be.

Birinyi Associates, headed by founder Laszlo Birinyi, has been just one voice in a recent chorus of fund managers and market participants who are calling investors back to stocks. Bill Miller of Legg Mason and Steve Leuthold of Leuthold Group are two others.

What To Do
First, we should stop trying to predict the future. It is obvious that very smart and credible people have vastly different opinions on where we are headed.