When a man on the street was asked about the stock market he replied:

"This is worse than a divorce.  I lost half of my money but still have my wife".

Ba-dum-ch! 

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.

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? 

All right, it's fed day, so the markets are too wonky for me to watch.  I have tons of work to do, but needed a 5 minute break.  Someone pointed towards this link:

http://www.frbsf.org/education/activities/chairman/

It allows you to control monetary policy.  Of course, it's very simplistic, but who wants to have to think too much on a 5 minute break.  According to my first crack, I was a fed guru.  My final fed funds rate was 3%, Uemployment was 5% and inflation a paltry 0.69%.  Maybe I'll try it again, but hey, why ruin a great track record. 

So when do I get Benny's job?

Chime in with your score.

A little Sunday funny.

http://www.youtube.com/watch?v=SGkrNJ19DSU

It's Cramer getting busted by Rick Santelli on CNBC.  Rick is telling Jim to get off the high horse since he's been bullish on stocks forever.  Cramer basically said he hasn't, but the editor of the video provides show clips that prove otherwise.  I don't know that I follow this person's editing technique, but the point is crystal clear.  Do not listen to these people.  No matter how much someone screams, they don't know anything over you when it comes to the direction of the market over the short term.  Develop your own techniques, discover your own risk tolerance, create your own trading plan ... don't follow the clowns.

Do it yourself, or buy an index fund.

The market took a nasty little spill yesterday.  This was the first trading session of the year so we're now negative on the year.  If the prevailing trend continues throughout the year, volatility and wild rides are going to be the usual course.  We had a very long stretch of low volatility upward movement.  This doesn't seem like anything unnatural. So if you're looking to enter the market today, you'll beat the major indexes for the year on your very first try.  <grin>.  Everything was down across the board, so entering today already gives you 2% outperformance.  You may recall that this happened last year as well.  January was down a little less than 1% more than halfway through the month. Maybe things are a bit different than the past (famous last words) but towards the end of the bull cycle in 2000-2001, everyone continued to dump money into their favorite tech high-flyers.  I can remember the talk of refinancing your house to put the proceeds into the market because the returns were superior (always a stupid idea, by the way).  Finally in 2002, probably at the July test for a bottom, people got scared.  I think they realized that the Nasdaq wasn't going to "bounce" one day and the party would be back on.  People started talking about the doomed U.S. economy, red all over the 401K statements, month after month.  The company I worked for at the time was interviewing new companies to manage the 401Ks and the top company that everyone was talking about was offering some sort of buy-write strategy.  Everyone liked the idea of making money (or losing less) as the market was going down.  The corporate scandals were going to be endless and there was no transparency (sound like the same verbs used with subprime / lenders?)

So now here we are after completing a year where the markets notched average returns.  The doom and gloom news is at a fever pitch, which is odd if we're entering a bear market.  I don't necessarily see anything to cheer about, but is it really as bad as they're making it out to be?  Everything about the potential bear cycle seems fairly standard, inverted yield curve, slowing economy, slow stock market, growth beating value (an article on that forthcoming).  The prevailing negative attitude out there is perplexing though.

Learned something on CNBC this morning.  The quote was "As you've seen, the open is not necessarily what the close is".  OK, I think I understand what she was getting at (i.e. 80+ futures at the open doesn't mean that we're going to even close positive for the day), but that was funny.

We now have a consistent way to explain each up and down day.  The declining dollar.  If the market is down significantly, it's because of the declining dollar, of course.  If the market is up significantly (as it appears it will be this morning), it's because of the declining dollar.  Let me explain how.  The declining dollar means our currency is less competitive, which is bad for America.  The declining dollar means that our goods are more competitively priced to the global economy which is good for America.  If you want evidence of the latter, just look at how wonderful the Japanese economy has been doing over the last 20 years.  This is what a devalued currency does for you long term.

Our Bernanke which art in the Federal reserve
Hallowed be thy name
Thy kingdom come
Thine will be done
In none-US countries as in the US.
Give us this day a reasonable discount rate
Forgive us for our defaults, as we forgive those who default against us.
and lead us not into temptation but deliver us from falsely rated mortgage backed securities.
For thine is the kingdom, the power and the glory for the duration of a 30 year mortgage agreement.

Amen

(Keeping it light on a Friday before a holiday weekend, folks.  Enjoy it!)

Lenny Dykstra              Flea

I know I've never seen them in the same place at the same time.