'The Worst Is Over': U.S. Economy

Barton Biggs, 75 years old, believes the worst is over for the economy and for the stock market. While the market is likely to move sideways for the rest of 2008, he says there will be no recession -- and with the remaining poisons purged from the system, stocks should move upward next year.

He left Morgan Stanley in 2003 to start a hedge fund, Traxis Partners LLP, where he is a managing partner. Traxis has $1.7 billion under management. It's down 4% so far this year after posting a 25% gain last year. Mr. Biggs, his hair still reddish, is an intense fellow who follows the world from the modernistic Traxis office towering over New York's Rockefeller Center.

A creative-writing major at Yale, Mr. Biggs peppered his investor notes at Morgan Stanley with literary references from Shakespeare and other authors. Mr. Biggs's latest book, "Wealth, War and Wisdom," studies the rise and fall of international markets from 1935 through 1945, and focuses on the role of public psychology in driving market performance.