As Stephen Colbert pointed out, "if we were on the brink of financial collapse yesterday, we are 'brinkier' today".

So is today the day when the financial world stops?  The financial "neck" is so constricted that commerce stops?

When the market goes up to stupid heights, I'm skeptical ... now that we're brinkier today, I'm also skeptical that things are as bad as it's made out to be.  When times are good, I don't question that they're good, I question how GOOD they're made out to be.  Likewise with this crisis.  I see their ideals falling like dominoes.  People who just days ago said "this is capitalism at work" have jumped on the "I'm a fan of free markets ... BUT!" wagon.  I guess some of them just get the memo a few days later than others. 

So sit back and have a cup o' joe and watch the wheels go 'round.

The rejection of massive new spending to bail out irresponsibility is a breath of fresh air.

<standing o!> 

Last week, Buffett plopped down 10 billion to invest in Goldman.  Now he's acquired a 10% stake in BYD (Hong Kong battery maker).  When everyone is talking defense, getting out of the market and the beloved Cramer is saying raise cash, the most successful investor is buying.  Is this the best time to buy?  Who knows, we only have past figures to determine whether or not something is cheap.  At this point, it takes some brains and some guts to get in.  Since I have a little more guts than brains, I keep loading up on well diversified indexes.  As someone put it (unfortunately, anonymously), you could do worse things than to buy indexes 20-30% off of their highs.  My strategy is to keep on buying on the way down.  I figured if the market keeps going down, I'll buy some more.  So I start loading up at 20-30% off, if it goes to 50, 60, 70% off, I'll get even more ... then hey, won't I look smart?  Maybe I could get a gig on CNBC talking about how I predicted and bought the bottom.  <cough>

Keep in mind, these are long term holdings (10, 20 maybe even 30 years).  This is not advisable if one has a shorter timeframe before they need the cash.

What about speculative buying?  The blog came about mostly to talk about trading systems, speculative plays and ETFs, but with the markets in a bit of volatile state, the pure speculation that is normally at the forefront of my mind has taken a back seat.  It's not dried up by any means, the positions I posted last week are still as they were. I believe that fresh cash has a somewhat rare opportunity and it's taking center stage in my market evaluation at the present time.

The gas shortage has caused most of the southeast, especially Atlanta (and I hear Charlotte is pretty bad as well) to reconsider our activities.  So now, even though I currently have enough gas to get to work this week, everyone in the household has curtailed activities that involve driving somewhere.  We're making conservative and likely prudent decisions to ensure that we can perform our responsibilities as we get through this crazy time.  To me this type of "tough" decision making is what separates responsible people from the vast majority that are irresponsible.  We don't go to football games, cruise the strip, visit a friend across town instead of conserving what we have to handle our responsibilities in the coming weeks.  So here again, I see those running out of gas at football games and other things that don't matter.  These are the same people that probably won't make it to work on Monday thinking they have an air tight excuse.

This can directly translate to the current financial situation.  Too many people made decisions for the day without any respect for the consequences that lie ahead tomorrow.  Like those that aren't going to make it to work Monday, they have a sob story and an "air tight excuse", but the bottom line is that they acted irresponsibly and need to suffer the consequences.  While we continue to reward bad behavior, the markets, the economy and the country will continue to suffer. We're going to lose, or may already be losing our edge as we spend our efforts giving candy to the crying babies.  It warmed my heart to see some people taking to the streets to oppose this bailout.  Even if the alternative is a lot of pain for this country, I'm in favor of it.  It's time that people developed a sense of fear. Hopefully this fear will turn into more responsible decision making in the future instead of hopes of being bailed out again.

And on a lighter note, for those not in the southeast, I may snap some photos of the gas lines and stations with no gas (which is the vast majority of them).  You see the pictures from the 70's and it seems strange, and the first few times you see stations with the gas prices blanked out, it's very strange.  Now it's strange to see stations with gas.  The unfortunate thing is that people are getting mean and rude.  Slight panic is setting in and people are going to bizarre extremes to make sure their tank gets filled.  What's worse is that people are topping off, which only adds to the problem.

So my weekend plans consist of planning a way to get fuel at some point this week, seeing where my money ends up and how I can access it (thanks to the WaMu failure), and seeing how much of my tax dollars go to undeserving people.  Certainly not your typical weekend.

My bank failed.  However, we're lucky to have JPM come in and keep the day to day operations up and going.  I was half hoping to experience the FDIC in action for a life experience.  Call it sick, and you're probably right.  Of course, we did not keep amounts that were uninsurable in there, so at worst I would've been out some time and maybe a few bounced check fees?  As it stands, none of that is going to happen.

But another big icon falls.  As in the tech boom and subsequent bust, names that had become ubiquitous seemingly overnight were crumbling and becoming memories. Me and a friend recently spoke of WebVan.  This wasn't a company that crumbled that long ago (2002?), but half of the people at the table gave puzzled looks.  So it will go with Lehman, WaMu, IndyMac.  It will all be something we can point back at as experience.

<rant> 

Previously, I talked about my severe dislike of the short ban.  I don't think shorting is a good idea for me personally, but it's a function of the market.  Is it possible to measure success when it comes to the effectiveness of this plan?  The market is a measly 300 points away from the intra day low which was set right before they announced the short ban.  We're one weak session away from where we were before the ban was enacted.  So I would ask anyone who thought this was a good idea if they still think this a good idea.  We still had our weekly bank failure, the poorly run companies are still poorly run and still going down in value.  Only now no one can hedge themselves (assuming options are too complicated for most to fool with).

So I submit my opinion on the matter.  This did not help and the risk taken far outweighed the virtually non-existent reward.  Confidence was severely shaken in the concept of a free market and all for nothing.  I always get a kick on people blaming the shorts for making markets go down and I think it's a poor excuse to help a bull sleep ... and now we get to see first hand that it is truly bunk.

What's next from our clueless leaders? 

</rant> 

OK, it's a rhetorical question.  Whoever follows Cramer gets what he or she deserves.  I was shaking my head this morning as I saw the Cramer blip to "raise cash" and go into "gold".  This is the type of advice I would expect from someone who managed OPM.  On the other hand, the man who has stayed steady to his philosophies for a lifetime is putting up at least 5 billion of his own money to buy up financials ... quality financials of course, while there's blood in the streets.  While there's talk of not HAVING a Wall Street.

Well, I was a little early, but I've been wading into financials and still hold some C stock that was assigned at 22.50.  I've been selling calls on it since.  I'm also selling XLF puts that are way out of the money.  I'd like to say I'm as wise or insightful as Buffet, but not a chance ....

I was told by a radio person long ago that advertisers target audiences based on the volume of the commercial.  And I mean how "loud" they are, not how many.  Think about the difference between a Ford commercial versus a Mercedes Benz commercial.  Or maybe an ad for a monster truck rally (this SUNDAY! SUNDAY! SUNDAY!) versus an ad for the symphony orchestra and you start to understand the point.

So who has the loudest voice on financial TV and what is his target audience, versus who has the much quieter and reserved demeanor, but casts a much heavier line. Anecdotal coincidence? 

Short sellers have every reason to feel that the market deck is stacked against them.  When company stock shares go through the roof for no apparent reason (.com companies with no value, solar energy stock quardupling over a year with no products to market, etc), no one stops that.  It's "normal market forces" speculating on future value (cough).  Where is the government handouts to the shorts that are losing when the market gets out of whack to the upside?

So when companies finally have their hat handed to them and longs are screaming uncle, the government comes in and bails everyone out.  All they get is a firm wag of the finger and short sellers are shafted.

Again, I don't short sell for a number of reasons, and this is a good one unfolding right before us.  I don't usually make any recommendations on this blog, but I will here ... do not short sell stocks for the long term.  If you must do some short term speculation to the downside or hedge an existing bet, please consider doing so with options.  Short selling is no way to make money long term.

Shorting may exacerbate a move up or down.  But who cares, it's a (somewhat) free market.  People should be able to buy or sell freely.  The advocates of this in this country say that let's do it "just for a little bit".  Let me ask you this, Mr. Short Sale banner guy, how would you like it if BUYING was banned "just for a little bit".  Doesn't make a lot of sense, does it?  So if anyone is trying to convince you that short sale banning is a good idea, ask them this question.  You'll likely get a hand in the cookie jar or deer in the headlights type look.  Ask them to please go back and take their seat ... you've got some stocks to short.  

And for the record, I don't short, ever.  If there is any bias in these markets, it's up.  Maybe not today, but long term, you've put the odds against you.  Trading and investing is hard enough, so why make it harder.  If I'm bearish on something I always use a bearish option play, but I never short a stock.  I still defend your right, short seller, to do it. 

The next item we need for this to become a full fledged panic is a market halt.  With credit markets more or less frozen and now "risk free" assets like money market accounts halting redemptions, an equity market halt would complete the trifecta and we'd be off to the races.  I sure hope it doesn't happen, but the infallable have failed or have been bailed out. Now the average joe on the street is whining about market losses and it's front page news.  Little Suzie's college fund has lost 30%+ and now we don't know if little Suzie can go to school.  I certainly hope this wasn't their ONLY plan to send Suzie to school.  Probably some financial planner put this together and didn't explain risk.

I was going back to the beginning days of this blog where the VIX was below 10.  It seems like risk was a laughable memory in those days.  This was also the case during the internet boom.  Same story, different sector.  We talk about having short memories (and I'm among those with the shortest), but come on folks.  This is typical.  This is why markets return higher rates over time, because you're taking on risk.  Loss of principle can and does occur.  Booms and busts run in cycles. We're busting, deal with it.

What I also fail to hear is how much principle people truly lost.  Many folks mark to market their gains as if it was locked in.  So over the last several years, someone may have invested 100K, which grew to maybe 150K and now it got knocked back to 125K.  If you ask them, they will tell you that they LOST $25,000.  Got news for you, that's a gain.  If someone can tell me how that's a loss, I'd love to report to the IRS as such.