John Mugarian's Dynamic Growth

Dynamic Growth: ETF Portfolio

NEW BUYS:

None

NEW SELLS:

None

SWITCHES:

None

Here are our Top 10 ETF's for the week of March 3rd:

1) DBA: Powershares DB Agriculture Fund- .714
2) SLX: Market Vectors Steel Index Fund- .551
3) EWZ: Brazil Index- .584
4) EEB: Claymore ETF BNY BRIC- .531
5) FXF: Currency Shares Swiss Franc Trust- .484
6) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .434
7) OIH: Oil Services HOLDRS- .394
8) PGJ: PS Golden Dragon China Fund- .352
9) KBE: KBW Bank ETF- Not Rated
10) IYF: iShares Dow Jones US Financial Sector- Not Rated

Honorable Mention:

INP: India Total Return Index- .310

Notes:

Here are a list of the top sector ETF's. Despite their leadership positions, I find these sectors severely overbought, and due for a correction. This being said, momentum traders can continue to fuel the run in these assets for a few more months.

As long as fear exists in the US financial system, and inflation remains a problem, traders will continue to invest in commodities such as gold and energy as a hedge against inflation.

Bonds: US Government Securities, Treasury Bonds, and TIPS.

Commodities: Gold, Precious Metals Funds, Select Commodities & Materials.

Oil: While due for a pullback of $10-15/bbl, a major sell-off will not occur unless a political shift occurs in Washington.

Brazil, the BRIC nations, Steel, Agriculture, the Swiss Franc, Oil Services, and China continue to be very strong investment themes. Our long term bet on the Financials continues to make sense, especially if the Federal Housing Administration (FHA) gets the ok to buy up to 1 million mortgages over five years to help prevent foreclosures.

Foreign Currencies: Euro, Canadian& Austrailian Dollar, Mexican Peso

Here are our Top 10 Fidelity Sector Funds for March 2008:

1) FSESX- Energy Services +5.6%
2) FNARX: Natural Resources +2.6%
3) FDFAX: Consumer Staples +9.5%
4) FSENX- Energy +7.3%
5) FSCHX: Chemicals +4.2%
6) FSMEX: Medical Equipment -1.8%
7) FSCGX: Industrial Equipment -9.7%
8) FSDPX: Materials +2.1%
9) FWRLX- Wireless -17.0%
10) FSRBX: Fidelity Banking Portfolio -4.7%

Honorable Mention (Holds):

FSDAX: Defense & Aerospace +2.1%

Notes:

The percentage gains or losses above indicate our results based on the original purchase price. Overall, the Fidelity Sector Fund portfolio is down -1.1% versus much larger declines for the DJIA, S&P, and NASDAQ.

As far as our over-weighted positions in Energy, we believe we can ride this trend for another month or so.

One sector I am looking to add is the Select Home Finance Portfolio (FSVLX). This is another contrarian play, but the fund is down -9.62% ytd, and down -42.37% in one year. Since its inception in December of 1985, the fund has returned 12.33% over the life of the fund.

There will always be a need for consumers to finance their homes, so logic tells us that after the current credit crunch is resolved, home finance profits will return to their historical norms. I am looking to add this fund to the DG portfolio sometime in March or April.

Here are the top 10 stocks in the Select Home Finance Portfolio.

FANNIE MAE
HUDSON CITY BANCORP INC
ANNALY CAPITAL MGMT INC REIT
FREDDIE MAC
NEW YORK COMMUNITY BANCORP INC
WELLS FARGO & CO
COUNTRYWIDE FINANCIAL CORP
WASHINGTON MUTUAL INC
PEOPLES UNITED FINANCIAL INC
CHIMERA INVESTMENT CORP

Pretty scary stuff, huh? Yep, that's when we want to buy.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

The stock market rallied in the last hour of trading as the interventionists stepped in to prevent a full blown rout. The DJIA closed down 7.49 after trading between down as much as 105 points, and the NASDAQ closed down 12.88 after trading down as much as 31 points.

This morning Intel (INTC) lowered its earnings forecast, and Citigroup (C) said it may need more capital from the Muslims in Dubai, Kuwait and Saudi Arabia.

The stock market is down sharply as Fed Chairman Ben Bernanke called for mortgage companies and banks to provide loan to relief to borrowers. Of course these loan modifications will eat into lenders profits so the financials are under pressure today.

In the Gen-X, "well duh" department, Merrill Lynch reduced its earnings forecasts for Citigroup saying they could write down another $18 billion in bad mortgages.

I am of the opinion that Merrill's calls are becoming a great contrarian indicator

Crude is trading up this morning likely due to another "pink elephant" crisis. The April contract is trading up 51 cents to $102.96/bbl. As I have said many times before, there is always a "good" excuse for why oil prices are high.

As long as we continue to get excuses for why oil should be high, we will continue to invest in energy.

Even a senior Gulf OPEC delegate told reporters on Tuesday that "$100 a barrel is a "very high" price, but the strength was fuelled by the weakness of the U.S. dollar, economic uncertainty and political tension."

Overnight, Japan's Nikkei stock average was up fractionally, Britain's FTSE 100 fell 1.22%, Germany's DAX index fell 1.26%, and France's CAC-40 declined 1.14%.

In Political News

As American soldiers fight wars abroad against radical Muslims, and American workers fight NAFTA radicals here at home, American Democrats will vote in primary contests in Texas and Ohio. This being said, voters will choose between a woman (Hillary) whose husband (Bill Clinton) pushed a democratic congress to pass NAFTA, and a senator (Barack Obama) whose middle name is Hussein.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Buy what investors they hate, sell what investors love. Sounds easy doesn't it? Well, actually it is if your time horizon is 2-5 years rather than 2-5 weeks. Since the majority of trading on Wall Street is done by people whose investment results are graded daily, weekly, monthly, and quarterly, many of their investment decisions are driven by emotion.

The smart money (those who have a longer time horizon) will do the opposite of what everyone else is doing.

Markets, like the one we are experiencing now, are what the smart money live for. While many investors hope for returns of 8-10% per year, the smart money look for stocks that can return 100% in 2-5 years.

In his latest shareholder letter, Warren Buffett revealed that Berkshire Hathaway posted a 21.1% compounded annual return over the last 43 years. He has said many times that what he does is not that hard, but the average investor cannot bring themselves to follow these very simple principles.

Several studies have been done over the past 50 years, and time after time investors who follow the contrarian strategy of buying high quality stocks that are out of favor tend to outperform the market.

As an example;

1) The Dogs of Dow- Studies have shown that investing in dividend strategy of the ten highest yielding Dow stocks tend to outperform the market.

2) Werner F.M. DeBondt and Richard Thaler study of the 35 best and worst performing stocks on the New York Stock Exchange from 1932 through 1977 found that" the best performers over the preceding five and three year periods underperformed, while the poor performers produced significantly greater returns than the NYSE index." Source- Investor Home

3) David Dreman, in his Forbes 5/6/96 column titled "Ben Graham was right--again, studied the largest 1500 stocks on Standard & Poor's Compustat, for the 25 years ended 1994. He found that the 20% lowest P/B stocks (quarterly adjustments) significantly outperformed the market which outperformed the 20% highest P/B." - Source- Investor Home

Here are a few calculators you can play with to get some historical return data- Moneychip

When I look at the annualized returns of Value vs Growth, clearly Value has outperformed.

When looking for stocks that have an 80-100% return potential, I look for stocks trading at or below their book values. When looking to invest in a sector, see what sectors are most represented in the discount to book value list.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

The stock market is finally going to open down below our first entry target of 12,000 on the Dow. We have been waiting for a re-test of the lows set in January before we began committing additional cash reserves to the market.

The only reason- I believe- the markets have not already tanked is the interventionists (I.E. PPT- Plunge Protection Team) have been working overtime to prevent a large scale decline.

Based on this little tidbit of information, the lows we saw in January may hold. In case the markets don't hold above the January lows, we will stick to our discipline of adding to the market in thirds.

% Declines from DJIA High of 14,198:

10%= DJIA 12,749
15%= DJIA 12,041- 1/3rd
20%= DJIA 11,332- 1/3rd
25%= DJIA 10,624- 1/3rd

This morning's employment news came in much worse than expected as the February non-farm payrolls were down 63,000 versus expectations of +25,000. To add more fuel to the flames the prior two month's numbers were revised lower.

Prior to the release of the employment numbers, the Fed announced it would inject some additional monetary capital into the market.

Bad news is plentiful, and investor pessimism is very high. This is music to my ears. We have been saying for many months that investors need to prepare themselves for a recession, and a bear market that usually follows.

For traders, bad news and pessimism usually sets the stage for violent bear-market rallies that can be extremely profitable.

Stocks sold off sharply yesterday after the numbers for U.S. home foreclosures was released. In addition, Thornburg Mortgage (TMA), and the Carlyle Group both received default notices on loans and mortgage-backed securities.

From where I sit, our current economic crisis has many of the same characteristics as 1973-74. I have thought this all along, but yesterday's exchange between OPEC and President Bush pretty much solidified my conclusion.

The headline in the business section of yesterday's paper read "OPEC blasts Bush on Oil". A few hours later, the rebuttal came- "Bush blasts OPEC mistake".

So who is right? In reality, both are right.

Dynamic Growth: ETF Portfolio

NEW SELLS:

INP: India Total Return Index- .267

SWITCHES:

Here are our Top 10 ETF's for the week of March 10th:

1) DBA: Powershares DB Agriculture Fund- .642
2) SLX: Market Vectors Steel Index Fund- .550
3) EWZ: Brazil Index- .567
4) EEB: Claymore ETF BNY BRIC- .502
5) FXF: Currency Shares Swiss Franc Trust- .551
6) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .406
7) OIH: Oil Services HOLDRS- .373
8) PGJ: PS Golden Dragon China Fund- .315
9) KBE: KBW Bank ETF- Not Rated
10) IYF: iShares Dow Jones US Financial Sector- Not Rated

Honorable Mention:

None

Notes:

In our opinion, Gold, Oil, and select commodities are fast approaching the definition of a bubble. Since the US economy is in our opinion already in a recession, and as the dollar continues to hit new lows, traders and hedge funds are piling into the 3 sectors above as a hedge against inflation. As traders pile into these sectors, don't think for a moment that they are buying at reasonable prices.

The major problem for traders is they cannot find anywhere else to go. I am of the opinion that parking money in low yielding cash accounts makes more sense than buying something at a bubble high.

The Emerging markets have been positive prior to last week, and are now beginning to soften as the MSCI Emerging Markets ETF index fell almost 6% last week.

China's massive growth will slow along with the US economy, but falling from double digit growth to high single digits is better than what is happening here at home.

Here are our Top 10 Fidelity Sector Funds for March 2008:

1) FSESX- Energy Services
2) FNARX: Natural Resources
3) FDFAX: Consumer Staples
4) FSENX- Energy
5) FSCHX: Chemicals
6) FSMEX: Medical Equipment
7) FSCGX: Industrial Equipment
8) FSDPX: Materials
9) FWRLX- Wireless
10) FSRBX: Banking

Honorable Mention (Holds):

FSDAX: Defense & Aerospace

Notes:

Last week I mentioned that we were looking to add another contrarian play to our Fidelity Sector Fund portfolio; the Select Home Finance (FSVLX) fund. We are not ready to pull the trigger just yet, but it looks as if a full blown panic is ready to hit the group. We are going to take a wait and see approach before pulling the trigger.

Here are the top 10 stocks in the Select Home Finance Portfolio. If you pull up these stocks individually, you'll see that several of these stocks have been taken to the woodshed.

FANNIE MAE
HUDSON CITY BANCORP INC
ANNALY CAPITAL MGMT INC REIT
FREDDIE MAC
NEW YORK COMMUNITY BANCORP INC
WELLS FARGO & CO
COUNTRYWIDE FINANCIAL CORP
WASHINGTON MUTUAL INC
PEOPLES UNITED FINANCIAL INC
CHIMERA INVESTMENT CORP

The Week in Review:

As the credit crunch continues to worsen, I believe the US Government come to the aid of Fannie Mae (FNM), Freddie Mac (FRE), and millions of homeowners who are on the brink of losing their homes.

Look for some sort of bailout plan by the Federal Housing Administration (FHA) where the US Government will get the ok to buy up to 1 million mortgages to help prevent foreclosures, and more credit losses by banks. In my opinion, the Federal Government has no other choice. This seems to be the logical move to stop the foreclosure crisis in its tracks.

This being said, a bailout of this proportion will still take several weeks. As such, the equity markets will continue their downward spiral until a solution to the crisis appears. We are going to continue our discipline of adding to underweighted portfolios as the market declines. Our future purchases are based on various downside targets on the DJIA.

They are...

% Declines from DJIA High of 14,198:

10%= DJIA 12,749
15%= DJIA 12,041- 1/3rd purchase
20%= DJIA 11,332- 1/3rd purchase
25%= DJIA 10,624- 1/3rd purchase

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

I was watching a re-run of the movie "My Cousin Vinny" a few days ago, and Joe Pesci's (Vincent Gambini) opening comments are how we should view the advice coming from Wall Street and their stock promoters.

Here is the You-Tube video clip.

For over a year, I have warned investors of the dangers lurking as a result of the housing bubble, and all of the fallout that generally follows. While I was waving the red danger flag, Wall Street and their stock promoters were countering with comments like;

-Goldilocks Economy
-Soft Landing
-The Resilient Consumer
-"Points above new all-time high" on your TV screen.
-Valuation models suggest stocks are too cheap to pass up at these levels.

The one that takes the cake is "CNBC's- Erin Burnett" reading from the teleprompter saying "move over Goldilocks- Economic Nirvana", along with Jim Cramer telling you to buy.

Here is a video of CNBC's Erin Burnett calling Apple Computer the s**t stock.

Was this just a Freudian slip?

In any event, now that the lambs have been led to slaughter, the mood and tone for financial assets has change dramatically. A weekend story in Barron's suggested that either Fannie Mae or Freddie Mac would go bankrupt. Almost on cue, the next rumor that broke was that Bear Stearns was struggling with liquidity issues.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Yesterday, in an unprecedented move, the Fed announced it would provide its primary dealers with $200 billion to lend to financial firms by using their high-grade mortgage securities as collateral.

Since no one really knows what a high-grade mortgage security is nowadays, lets just call it what it is, a good old fashion bailout.

In addition, the Fed also increased swaps with the European Central Bank, and the Swiss National Bank, to make more U.S. dollars available to European banks.

What all of this is telling us is a remedy for the current credit crisis is appearing. Sure, there will be more scary moments down the road, but the Feds main focus continues to be bailing out major banks, and Wall Street brokers.

Of course, while this plan is unfolding, inflation pressures are increasing for commodities, raw materials, natural resources, food and energy.

Investors are very aware that once a solution to the credit crunch is achieved, the Fed will begin to target inflation. They will come to the rescue of the dollar by raising interest rates once the all-clear signal is sounded.

Here is the double-edged sword to the inflation problem. The dollar may rally, energy prices and raw material prices may decline, but the costs of goods and services will remain high. Simply put, once your plumber, electrician, or favorite restaurant raises their prices, when inflation subsides, their price increases will not.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

I was watching George Carlin (comedian)on HBO the other day. I realize he has made his fortune by being cynical, but some of what he says makes you think.

While I don't agree with being cynical in everyday life, when it comes to your money you should be skeptical and lower your eyebrows every time Wall Street opens their mouth. Always keep in mind what's in it for them before committing capital.

The financial markets were not designed by people who were interested in making you rich. Investors who do their homework can certainly get rich in the financial markets.

The scandals from 2000 (analysts and corporate executives lying, investment banks, etc) should be proof enough that the markets were not designed with our best interests in mind. Warren Buffett knows this, and explains why he is a value player, and not a momentum trader.

Don't you find it odd that at the root of every financial scandal, or economic crisis, there is the involvement of a Wall Street investment bank?

-The 1987 market crash happened because of over speculation, overvaluation, and an attempt by the US to prop up the dollar to fight inflation.

While this is not happening right now, you've got to believe that once the banks and brokers are re-liquefied, interest rates have got to go up.

-as an example, the 1994 collapse of the hedge fund, Long-Term Capital Management happened uner the watch of a former vice-chairman of Salomon Brothers.

Hedge funds are imploding all around us, and at the epicenter of this destruction are some of Wall Street's top investment banks.

Dynamic Growth: ETF Portfolio

None

Here are our Top 10 ETF's for the week of March 17th:

1) DBA: Powershares DB Agriculture Fund- .710
2) EWZ: Brazil Index- .575
3) SLX: Market Vectors Steel Index Fund- .567
4) FXF: Currency Shares Swiss Franc Trust- .565
5) EEB: Claymore ETF BNY BRIC- .487
6) OIH: Oil Services HOLDRS- .393
7) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .391
8) PGJ: PS Golden Dragon China Fund- .285
9) KBE: KBW Bank ETF- Not Rated
10) IYF: iShares Dow Jones US Financial Sector- Not Rated

Honorable Mention:

Here are our Top 10 Fidelity Sector Funds for March 2008:

1) FSESX- Energy Services
2) FNARX: Natural Resources
3) FDFAX: Consumer Staples
4) FSENX- Energy
5) FSCHX: Chemicals
6) FSMEX: Medical Equipment
7) FSCGX: Industrial Equipment
8) FSDPX: Materials
9) FWRLX- Wireless
10) FSRBX: Banking

Honorable Mention (Holds):

FSDAX: Defense & Aerospace

Notes:

Sunday night, Bear Sterns was under intense pressure to find a buyer amid the liquidity crisis, and JP Morgan/Chase stepped in to scoop up BSC for $270MM or $2/shr.

The Fed also cut the discount rate 25bp to 3.25 percent. Tomorrow, investors are anticipating the Fed will cut the Fed Funds rate by 100 basis points to 2.00%.

The financial crisis gripping the markets is the result of years of greed and stupidity. Lenders got greedy by developing new and exotic ways to lend money, and investors were stupid to take on massive amounts of debt when they couldn't afford the payments.

Condo and Real Estate flippers hoping to be the next Donald Trump let their greed overtake common sense, so now they have to live with the consequences.

Right now, many Consumers, Wall Street investment banks, and Lenders are experiencing a good ole dose of financial Corporal Punishment. Sometimes this form of punishment is the only thing that will work to teach people a lesson.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

I have to admit; at times I do like watching Jim Cramer’s “Mad Money” show. Notice I did say “show”. I think Jim does a very good job of entertaining people, and this is tough to do with the subject being finance and the stock market.

All the “booyah” stuff reminds me of the hyped up ads you see for regional casino companies. All of the excitement generated on the Mad Money Campus Tour is nothing but hype, and adds to the viewer’s casino mentality.

Over the past 20 years I have heard numerous investors refer to investing in stocks as gambling. Of course all of the people that have said this were not rich or well off.

The hype generated by Mad Money does fuel a casino type mentality, and when bear markets arrive, thousands of gamblers lose millions of dollars.

The example yesterday was Bear Stearns (BSC). I’ve told you over and over that I do not and never have trusted investment banks, but yet, millions of investors still house their brokerage accounts with theses people.

Stupid is as stupid does.

Cramer recommended Bear Stearns when it was trading around $85, saying the stock was too cheap, and would probably be bought out. He was right about the buyout, but he got some investors to buy 83 points above the takeout price.

Now that the credit crunch has hit, and various sub-prime derivatives are being identified in brokerage money market accounts, clients with accounts at Smith Barney (CitiGroup), Merrill Lynch, UBS, Bear Stearns, etc.. are wondering if their money is safe.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Despite yesterday's 400+ point rally, the disciplining process is not over. Prudent investors who were alert enough to recognize the irresponsible excesses prior to the credit crunch are now sitting in the catbird seats as stocks bargains appear across all three major exchanges.

It seems as if Americans are always scared of something. The current housing downturn is being heralded as the worst since the Great Depression. And consumers who received daily solicitations from credit card and mortgage companies are finding out their newly found money wasn't free after all.

Alert investors could have seen the current wave of bankruptcies coming if they had just paid attention. In 2005, I told investors that the timing of new bankruptcy law signed by President Bush (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) was a little odd. Well of course now we know why the new law was enacted.

You can tell me that the administration and corporate America (lenders, credit card companies, etc...) didn't see the credit crisis coming. Almost 12 months before the signs of economic trouble appeared, the new bankruptcy law was enacted.

Now that irresponsible consumers are paying the price for overspending and over borrowing, they basically face two choices when declaring bankruptcy;

1) Chapter 7- A court supervised liquidation of personal assets to pay creditors as much as the assets will allow. These debts are primarily consumer debt.

2) Chapter 13- Which basically allows individuals with jobs to pay off their creditors with future income rather than a liquidation of their property.

Of course, if a person’s job has been outsourced to a foreign country, and they have been unable to find a new a job, their assets will be liquidated under Chapter 7.

After the Bear Stearns news on Monday, the brotherhood of investment bankers came out today and began defending one another. Lehman and Goldman Sachs were upgraded by the brotherhood after a Morgan Stanley analyst said "it was time for the bears to ease up on the financials and for shorts to cut their positions".

Huh, after this little piece of advice from MS, it maybe its time to doubled down on the short positions.

Goldman Sachs upgraded Lehman to a buy from neutral, and Wachovia upgraded Goldman Sachs to a buy from market perform.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

For several weeks now, financial TV has been touting Gold and Oil. These are great contrarian indicators, and I place a copy of short side positions for both on the trading website- tipstraders.com.

Both trades are working out well.

In the financial markets, everything eventually revert back to their mean. Stocks that are severely oversold (financials), and the severely overbought (commodities) have all traded to extreme levels.

Another contrarian indicator is the Tonight Show with Jay Leno. A few nights ago Leno mentioned Gold and Oil saying, "Even President Bush starting to get worried about this economy being out of control, you know. I mean, gold is over $1,000 an ounce, Oil, $1,100 a barrel, and Hookers, $5,000 an hour."

I remember Leno talking about how bad the stock market was in 2002, and that turned out to be the bottom.

Wilbur Ross was interviewed on CNBC the other day, and said speculators were responsible for 20% of the daily trades on oil, gold and copper. He suggested that commodities were in a bubble, and was quickly cut off as CNBC broke for a commercial.

In addition, another CNBC employee, Jim Cramer, said that gold was going to $1600 last week.

Dynamic Growth: ETF Portfolio

None

Here are our Top 10 ETF's for the week of March 24th:

1) FXF: Currency Shares Swiss Franc Trust- .546
2) EWZ: Brazil Index- .496
3) SLX: Market Vectors Steel Index Fund- .489
4) EEB: Claymore ETF BNY BRIC- .435
5) DBA: Powershares DB Agriculture Fund- .405
6) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .351
7) OIH: Oil Services HOLDRS- .307
8) PGJ: PS Golden Dragon China Fund- .212
9) KBE: KBW Bank ETF- Not Rated
10) IYF: iShares Dow Jones US Financial Sector- Not Rated

Honorable Mention:

Here are our Top 10 Fidelity Sector Funds for April 2008:

1) FSESX- Energy Services
2) FNARX: Natural Resources
3) FDFAX: Consumer Staples
4) FSENX- Energy
5) FSCHX: Chemicals
6) FSMEX: Medical Equipment
7) FSCGX: Industrial Equipment
8) FSDPX: Materials
9) FWRLX- Wireless
10) FSRBX: Banking

Honorable Mention (Holds):

FSDAX: Defense & Aerospace

Notes:

I am a little short on time since I am leaving this morning for Ft. Lauderdale, Florida. I will give you an update on what the economy is like in central and south Florida during the week. This will be an important indicator for what we can expect in the weeks ahead.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

We arrived in Ft. Lauderdale late yesterday afternoon, and I want to share a few observations with you.

The first observation may be obvious to some, but I was shocked to see the price of diesel fuel. I was seeing prices like $4.10- 4.15/ gallon for diesel. This is unbelievable!

The other thing I noticed was the scarcity of trucks on the road. Normally when we go on a trip we see several semi trucks on the road. This was not the case yesterday.

In addition to the scarcity of 18 wheelers, I noticed that the number of SUV's on the road has declined dramatically. Higher fuel costs will definitely be felt by consumers as corporations will pass on to the consumer.

Clearly, something is happening in the economy that has not yet been fully discounted by the stock market. I realized the PPT (plunge protection team) has been working overtime to prevent the stock market from caving, but we have some serious issues in the economy.

We all know about the issues with Real Estate, CDO's/SIV's, Consumer Debt, Bank Liquidity, and Lower Corporate Profits, but if energy prices do not begin to fall dramatically, the U.S. economy may suffer a prolonged recession.

Today, was a lack luster day in the stock markets. I am wondering if the PPT has enough power to continue holding the markets together. In years past, the stock market would have already experienced a 25-50% decline.

According to the good people at S&P, the daily swings of U.S. stock market are the most volatile they have been in 70 years. I was a little scared to do the math, but 70 years ago was 1938.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Today I took a side trip down Worth Avenue in Palm Beach, Florida. Regardless of how well off you think you are, a stroll down Worth Avenue will definitely humble you. If you want to see where "billionaires and multi-millionaires" go to hangout, take a trip to Palm Beach.

Here in Normalsville, the DJIA fell 109 points after the February durable goods orders recorded a dropped of 1.7%. Demand for machinery fell to an all-time low. Adding fuel to the fire, February new home sales fell to its lowest annual rate in thirteen years.

The dollar was sharply lower again today while oil closed at $106.15, up +4.93 for the May contract. The excuse for higher oil prices today was an Energy Department report that said stockpiles reserves came in less than expected.

Like I have said many times before, there is always an excuse for why you continue to get raped at the pumps.

According to MasterCard Advisors, US gasoline consumption in the week ending March 21 slipped 0.3% from the year-ago period, making it the sixth straight four-week decline.

Many of the guru's on TV are beginning to tell us that "the market is finding a bottom", or "the worst is behind us". I'm not so sure about that. These comments sound a lot like the "goldilocks economy" comments we heard in 2006-2007.

I think the best approach for us is to stick to a close discipline of letting the markets come to us. Given all of the economic headwinds facing consumers, I believe the odds of the DJIA breaking below 11,000 are better than 50%.

Dynamic Growth: ETF Portfolio

Here are our Top 10 ETF's for the week of March 31st:

1) FXF: Currency Shares Swiss Franc Trust- .589
2) EWZ: Brazil Index- .496
3) SLX: Market Vectors Steel Index Fund- .502
4) EEB: Claymore ETF BNY BRIC- .461
5) DBA: Powershares DB Agriculture Fund- .505
6) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .378
7) OIH: Oil Services HOLDRS- .360
8) PGJ: PS Golden Dragon China Fund- .260
9) KBE: KBW Bank ETF- Not Rated
10) IYF: iShares Dow Jones US Financial Sector- Not Rated

Honorable Mention:

Here are our Top 10 Fidelity Sector Funds for April 2008:

1) FSESX- Energy Services
2) FNARX: Natural Resources
3) FDFAX: Consumer Staples
4) FSENX- Energy
5) FSCHX: Chemicals
6) FSMEX: Medical Equipment
7) FSCGX: Industrial Equipment
8) FSDPX: Materials
9) FWRLX- Wireless
10) FSRBX: Banking

Honorable Mention (Holds):

FSDAX: Defense & Aerospace

The Week in Review:

After spending the week in the Ft. Lauderdale- Palm Beach area a few things have become clear. The rich (billionaires & upper end millionaires) clearly know more than the rest of the population.

In downtown Ft. Lauderdale I saw several brokerage firms, but in Palm Beach the financial district was dominated by investment banks (Lehman, Deutsche Bank, Citigroup private bank, Wilmington Trust, etc.).

As we navigate thru the current credit crunch, public money seems to be potentially at risk, but I would assume that the institutions located in Palm Beach have the ability to take deposits of the mega-rich, and tuck them safely away in offshore safe havens.

I am still of the opinion that during periods of extreme crisis, solutions do appear. We are in the midst of a bottoming process, but I am not sold on the idea that the final bottom has been reached.

This being said, dollar cost averaging into the markets now seems to be the appropriate thing to do. It will take the market and the economy several more months to heal before a new bull market can begin.

Last week was another volatile week in the market. The stock market rallied on short covering after the Fed cut short-term interest rates .75%, and announced it was increasing its cash infusion to its Discount Window allowing cash strapped banks to borrow directly from the Fed.

Last Monday, the Dow rallied 187 points on news that JP Morgan had increased its bit for Bear Stearns to $10/share from $2.

Later in the week investors began to get bad news as technology bellwethers Google and Oracle said the economy was beginning to negatively affect business. When you combine this news with disappointing new homes sales, falling home prices, weak consumer sentiment, weak consumer spending, falling durable goods orders, and higher oil prices, the markets couldn't hold on to any post Fed gains.

On Wednesday, the DJIA closed down -110 points.
On Thursday, the DJIA closed down -120 points.
On Friday, the DJIA closed down -86 points.