The Pause To Refresh

There is such a high velocity of change taking place today, investors, legislators, executives are all moving too fast and mistakes are being made....With the general markets down some -35% year to date, far too many people are trying to understand the enormity of the collateral damage being afflicted and it's ramifications. And at the same time rationalize their "investments."

This is an impossible task in this environment. High emotion and fear are global challenges today as almost everything has come to a complete standstill. We will not review the past few weeks. What we expect for the next several months....will be even worse. As the entire financial system is in the process of being purged (deleveraged), new rules and regulations and finally a recognition of the mistakes made over the past five years.

So what is anything worth today? Not much if you are trying to sell.....as the entire world is for sale today. Continue to hold great companies but be prepared for much more pain. The financial system will not just right itself for some time.....maybe a couple of more years.

California's economy is in trouble. It's economy of $1.8 trillion is upside down. It is twice the size of India's economy. India is in trouble now as well.....China sells more to India than any other country, including the USA. China will slow and that has become widely expected.

Smart people have said this correction so far is within historical parameters. Although record setting in modern times. When will the over sold market have a relief rally? When will it bottom? When will it start to discount all the negatives so well discussed in the media today? When will it start to climb the "wall of worry"? How will it exit the historically weak month of October? What should we buy today? What should we sell today? What will the earnings be for next year? What is oil going to do? What do I do with my cash? THESE ARE THE QUESTIONS WE GET DAILY.

Cash on the side lines as a percent of the economy or the market capitalization has never been higher. To a large degree this is the definition of panic.....and it will settle down..maybe sooner than later....but no one will know until months after the fact....

We do know Private equity, hedge funds, endowments, pension funds, city and state budgets are out of control, a slow down is in order for sometime. The cost of capital is going much much higher so earnings go much much lower.

Barkly seen here on an autumn afternoon years ago.