Doug Kass: 2006 may not be good

Another forecast for 2006. http://www.thestreet.com/p/comment/investing/10259674.html

Naturally, DK does not expect all forecasts to be correct. To him, 2006 does not look good. Likely that many other fund managers share his belief (not necessarily a majority). As a result, look for rallies being sold into...unless a strong breakout through 52-week highs.

Summary: Japan good, US vulnerable to bad surprises.

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Every December, I take a page from former Morgan Stanley strategist Byron Wien and prepare a list of 25 possible surprises for the coming year.

These are not intended to be predictions, but rather events that have a reasonable chance of occurring, despite the general perception that the odds are very long. I call these "possible improbable" events.

The real purpose of this endeavor is to consider positioning a portion of my portfolio in accordance with outlier events -- with large payoffs. After all, Wall Street research is still very much convention and groupthink, despite the reforms over the past several years.

Mainstream and consensus expectations are just that, and, in most cases, are deeply imbedded in today's stock prices. If I succeed in making you think about outlier events, the exercise has been worthwhile.

About a fifth of last year's predicted surprises actually happened, which was down from the prior two years -- nearly one-half of our prognostications proved prescient in 2004 and about one-third in 2003.