Two Down One to Go

We are asked daily what is happening....our analogy is similar to the correction in 2000-2003. We had three gut wrenching tests of "the lows" as each subset of the market went through it's cleansing.
We probably just went through our second this past week....each retest always feels worse...probably as an understatement. So one more...probably later this year....and it will hurt more. WHY? The worst "news" has yet to hit the biggest bubble...i.e. US Treasuries. Where by the way everyone is sitting. And the tax receipts at both the Federal and state level next month will be a small fraction of what our new young president is expecting. The bonds have already topped....the US dollar will be next....both very crowded trades.....and will begin to also start losing money....remember the "fixed income" market is many many times larger than the equity markets, especially after the correction we have had. The strong dollar and excepting bond market for the emerging deficits is a very short term phenomenon.

Joke of the week....our esteemed head of the Federal Reserve said he was really mad about the debacle at AIG. He said he had no idea it was just a big hedge fund. Really....JPM (Darth Vader) is a bigger hedge fund than AIG maybe times 100!

IBD said with Japan at 20 year lows, "three quarters of the companies in their biggest index trade below book value and at less than their cash on hand." We continue to avoid that country.

A money manager recently pointed out, in 2007 the total compensation of a chief executive in large U.S. corporations was 275 times that of the salary of the average worker, estimates the Economic Policy Institute in Washington. In the late 1970's CEO pay was 35 times that of the average U.S. worker. Over due compensation restitution, as appears to be occurring in 2009, reduces the risk of social revolution.

A buyers strike? in the 1930's people and corporations with money to invest went into a bunker as risk could not and was not rewarded. Look how fast smart companies are cutting dividends...much more to come.... As a famous economist has always said, "You can't make the poor rich, by making the rich poor and if you reward those that don't work and punish those that do, don't be surprised when people decide to not work."

China as a creditor nation with over a billion people are working many times harder than America's debtors today.....someone once said, "China is capitalism on steroids"...now America is going towards socialism.....and debating the nations largest radio talk show host...don't you think our leadership would have better things to do each day?

One thing is for sure...independent businesses can't compete with the Government. So investment options are few and far between.

Oil's low is in, so is China's....we'll probably get one more great investing opportunity. Oh by the way gun dealers are saying they are experiencing a shortage of bullets.

Danny Boy seen here patiently waiting for winter to end.