John Mugarian's Dynamic Growth

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

Wall Street- at least what is left of it- is basically holding a gun to the heads of lawmakers and investors. Chronic complainers with no money are calling into their congressmen and voicing their opposition to the financial rescue package.

I'm not sure if these congressmen are savvy enough to figure out that the number of people who voted for them in the last election is much larger than those calling and voicing objection to the rescue package.

As far as seeking advice, lawmakers need to consult Warren Buffett. Here is his most recent interview with Charlie Rose.

Buffett used words like "economic Pearl Harbor", and "Depression" when asked about the consequences of congress doing nothing. Since Buffett is sitting on about $30 billion in cash, and the average consumer is sitting on a boatload of debt, Warren has no reason to give us less than his honest opinion on what congress should do.

Today, the market market averages sold off ahead of the vote. Today's 348 point sell-off on the DJIA was basically a pointing of the gun, and pulling back the hammer. A no vote for the rescue package will probably result in pulling the trigger.

The S&P 500 dropped 4% as the three-month bank lending rate rose to its highest level since January. The economy continues to weaken as jobless claims climbed to a seven-year high, and factory orders dropped to a two year low.

On prospects for a deep recession, commodity prices tumbled, and crude oil fell to $94 a barrel.

General Electric (GE) lost -9.59% after the company said it was raising capital by diluting its shares, and selling $12.2 billion in stock at $22.25. Yesterday, CNBC (owner is GE) initially reported that Warren Buffett had invested $3 billion in GE. As I was watching the report, GE was trading around $23.40, and immediately had a buy order imbalance which drove the stock up to $25 and some change. When the details of Buffet's deal was released, investors who got sucked in saw an immediate loss. GE obviously has some serious issues with its finance arm.

Going forward, we will have to wait for an outcome on the vote of the rescue plan. The House vote is expected tomorrow.

A new bull market begins like a bear market begins, in fits and starts. In October 2007, the bear market began. But, many investors didn't recognize the fact until January 2008. Some investors even held out hope that the bull was alive until the July swoon. Since the market never went straight down, but did so with a series of lower highs and lower lows, investors held out hopes that every move lower was a buying opportunity.

Now, however, the markets are transitioning from a bear market to a bull market. The all important VIX index popped above 40 3x's this week, and the only thing missing is a big capitulation down day that reverses intra-day, and closes substantially higher on massive volume.

Investors are scared to death. They have the fingers on the sell button, and are ready to cry uncle on the next scary downturn. The media today is using words like "depression", and only a year ago they were touting the "resilient consumer", and "economic nirvana". What a difference a year makes!

With House approval of the $700 billion bailout package, the increase of FDIC insurance on bank accounts (to $250,000), $3.5+++ trillion sitting on the sidelines ready to enter the stock market, and an all out effort by global leaders to find a solution to the credit crisis, I am increasingly bullish. In fact, I am looking at every big down day from here as a buying opportunity. The stock market will not transition into a bull right away, it will do so in fits and starts.

Here's the way I see it. If investors were brave enough to invest in a market when the chart of the S&P 500 looked like this;

decisionpoint.com

Why are they so fearful when the chart looks like this?

decisionpoint.com

The truth of the matter is every major downturn in the stock market has been a wonderful buying opportunity for investors who can look beyond the moment. The key to not being fearful is understand this concept, and adding money to the market in stages, and not all at once. We are not betting red or black on a roulette wheel. We dollar cost average in over time.

Here are our Top 10 ETF's for the week of October 6th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) FXF: Currency Shares Swiss Franc Trust
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) KBE: KBW Bank ETF- Not Rated
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust

After the November elections and beyond, I am expecting our commodity and BRIC holdings to rebound sharply.

Last week we added the Fidelity Select Natural Resources (FNARX) fund, while selling the Fidelity Select Wireless (FWRLX) fund. We will probably jump back into more energy ETF's and mutual funds over the coming days/weeks.

Here are our Top 10 Fidelity Sector Funds for October 2008

1) FSCHX: Chemicals
2) FSMEX: Medical Equipment
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSRBX: Banking
10) FSVLX: Home Finance

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

Here's a question. If you could go back 4,5 or even 6 years ago, and buy stocks at the same prices, would you?

The problem of course is the media, almost in unison, is constantly referring to, and comparing what is happening today, to the "Great Depression".

If you have read books such as "Wall Street Meat", "The Fortune Tellers", or any other books explaining how Wall Street feeds the media with garbage to get the little guy to act, then you'll look at all this talk about the Great Depression II with a suspicious eye.

You need to understand, without conflict of interests, Wall Street cannot make money.

Yesterday, the DJIA dropped below 10,000 for the first time since October 22, 2004. Intraday however, the DJIA dropped to 9,525.32, a level not seen since September 16th, 2003. The lows over the past 10 years came in September and October. Once after the 911 attacks (2001), and again in 2002 after the bursting of the NASDAQ bubble.

September 21, 2001- DJIA bottomed at 8062.34. On this day, the VIX index spiked to 43.76.

October 7, 2002- DJIA bottomed at 7404.94. On this day, the VIX index spiked to 42.95.

March 11, 2003- DJIA bottomed at 7559.64. On this day, the VIX index spiked to 33.75.

Yesterday, October 6, 2008- DJIA bottomed at 9,525.32, but the VIX index hit 58.24.

The VIX index is also known as the "fear index" representing the market's expectation of volatility over the next 30 days. In short, any reading above 40 signals "fear" and a potential market bottom. Any number below 20 signals a high degree of optimism, and a potential market top.

Some said today was not a capitulation day because the sell-off was not on high volume. This may or may not be true, but I could argue that the DJIA bottoming in March 2003 wasn't a capitulation either since the VIX index only spiked to 33.75 at a market bottom.

If the DJIA revisited its 2002-2003 lows from yesterday's low of 9,525.32, what level would the VIX close at then? 110?

What we are witnessing is panic liquidations by hedge funds. This is very obvious if you watched the energy sector today. Here are a few examples;

ConocoPhillips (COP): Low for the day $59.19. Closed at $64.74.
National Oilwell Varco (NOV): Low for the day $32.71. Closed at $37.02.
Schlumberger(SLB): Low for the day $61.30. Closed at $69.50.
Transocean (RIG): Low for the day $79.70. Closed at $88.38.

Today, I am expecting the hedge fund unwinding to continue. When you couple that with forced selling by mutual funds to meet redemption's, we have all the signs of a market bottom all around us.

The latest rumors circulating is the G8 ministers were going to get together and coordinated an interest rate cut. In addition, the Bank of England is expected to cut rates by Thursday, and the European Central Bank has hinted a rate cut is in the works for their November meeting.

On the contrarian side, Jim Cramer is finally bearish. Yesterday he told viewers "to sell into any strength, whenever you get it... in any rally."

Not to be overly critical, but wasn't Jim Cramer the same guy that gave you these "Predictions for 2008?"

-Goldman Sachs (GS) makes more money than every other brokerage firm in New York combined and finishes the year at $300 a share. Not a prediction—an inevitability. In fact, it’s only January, and I think it’s already come true.

Today's close: $124.00

-Oil goes much higher, maybe as much as $125 a barrel... We are running out of oil more quickly than people can imagine, and that means great returns for oil companies. Just buy the stock of the company you filled up at today or buy a driller (Transocean (RIG) is my favorite), then sit back and make money.

Oil closed at $88.56/bbl after peaking at $145.00. On January 2, 2008 Transocean (RIG) was at $145.95. Today it closed at $88.38. Apparently we are not "running out of oil more quickly than people can imagine", due to the worldwide economic slowdown.

-Google stock reaches $1,000.

On January 2nd, 2008, Google (GOOG) closed at $685.19. Yesterday the stock closed at $371.21.

I'll end with this one.

-Apple (AAPL), will reach $300.

On January 2nd, 2008, Apple closed at $194.84. Yesterday, Apple closed at $98.14.

Something tells me Jim's charts are upside down.

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

For years-many years- I have said that the stock market isn't for everyone. Investors (??) that think the stock market should always go up have no business in it. Down markets, bear markets are all a part of the game. The stock market is no place for whiners.

Personally, I really enjoy down markets and bear markets because it gives me a chance to level the playing field. History tells us that bear markets-even vicious bear markets are wonderful opportunities for investors that can look past a current crisis. Make no mistake, we are in a crisis. Make no mistake, one day the crisis will end.

Select Hedge Fund managers and Wall Street whippersnappers (Born after 1972-74) have never experienced severe economic turmoil. In short, they "aim, fire, and shoot" when selling stocks, and can't see the forest for the trees.

This crisis will end. In fact, it will probably end sooner than most think. The big story of the day is England, Canada, the ECB, Sweden, Switzerland, and the U.S. cut global interest rates across the board. Also, the credit markets will receive a well deserved lube job as the Fed injected money into the commercial paper market. The other big rumor is the Treasury will be putting some of the bailout money to work soon, and the market to market accounting standards will be lifted.

On the contrarian side (see yesterday's journal post), Jim Cramer is bearish. This is music to any contrarian's ears!

A perfect set up for today would have the DJIA selling down below 9000, scaring the heck out of investors. At this point the little guy panics and sells while the rich guys fly in and scoop up bargains. The market reverses course, and heads higher to close up strong for the day.

Since the little guy is already scared, and many have already panicked, it may not take that drastic of a sell-off.

Here's what the DJIA did during the bear market phase of 2000-2002;

High: January 10, 2000- DJIA 11,750
Low: September 30, 2002- DJIA 7,460- down -4290 points or -36.5%

Here's what the DJIA has done during this bear market phase which began a year ago today;

High: October 8, 2007- DJIA 14,198
Low: Today (at 10:39cst)- DJIA 9213- down -4984 points or -35.1%

During the 2000 bear phase, it took the Dow 33 months to drop -36.5%. During this bear market phase (Oct 2007-Oct 2008), the DJIA dropped almost the same amount (-35.1%) in just 12 months.

The news media has been interviewing investors who are saying they lost X amount, won't be able to retire, etc, etc. These are all the things you hear near panic bottoms.

After a strong rally, expect the market to settle down within a trading range. Confidence in the market and the future has been severely tarnished, and it will take some time for emotions to heal.

The trend during the healing process will begin with a series of higher highs, and higher lows. The good news is one year after the last three recessions the DJIA was up on average 27.7%. One year after the last five recessions the DJIA was up on average 28.6%.

New bull markets begin a quarter or two before the U.S. economy bottoms. Keeping an eye on the forest, and not the trees, is what separates the men from the boys.

One year ago today, the bear market officially began. Does the bear end today???

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

Yesterday was very interesting. In short, it looks as if the "Smart Money" is beginning to accumulate stocks again. The "Smart Money" is flies in like a stealth bomber, unannounced, quiet, but you know there around dropping bombs of money here and there.

Keep an eye on IBM which pre-announced and reaffirmed its full-year outlook. GE could be a different story.

Yesterday's wild swings caused the DJIA to go from positive to negative before giving way to a late day sell-off. The volume was impressive as the NYSE traded 2 billion shares, while the NASDAQ traded 3.5 billion.

Redemption's and forced liquidation from hedge funds and mutual funds was evident, which added fuel to yesterday's volatility.

Investor sentiment is extremely negative as;

- The CBOE Volatility Index, the VIX, spiked above 59 and the NASDAQ 100 Volatility index reached 64.

- The Investors Intelligence survey saw the Bulls drop to 25.3% which is the lowest reading since July 1994.

- New highs and lows continue to reach levels not seen since 1990.

As for the pain felt by investors here in the U.S., you need to know your not alone. Below is a list of the returns for some of the major world indices.

World Markets: 1 year returns as of 10-8-08

S.&P. 500 Index: –37.07%
Dow Jones Industrial Average: –34.64%
Nasdaq Composite Index: –37.93%

FTSE 100 Britain: –33.99%
DAX Germany: –37.18%
CAC 40 France: –40.35%
Mibtel Italy: –47.40%
Bel 20 Belgium: –48.35%
FTSE Eurofirst 300 Europe: –40.74%
IBEX 35 Spain: –26.92%
OMX Nordic 40 Scandinavia: –50.00%
AEX Netherlands: –47.39%
Micex Russia: –65.11%
TSX Comp. Canada: –29.49%
Bovespa Brazil: –39.27%
Bolsa Mexico: –34.98%
IPSA 40 Chile: –34.26%
MERVAL Argentina: –39.59%

September is historically the worst month for the stock market, but despite the crashes that have occurred in October, many of the major market reversals have occurred in this month as well. Since October 1st, however, the DJIA declined 15.3%, and the S&P 16.6%.

It looked as if the market was going to put in it's long awaited bottom. If it did or didn't remains to be seen. I think we are real close to a rebound that could recoup at least half of the losses incurred since the August highs. A minor sell-off today followed by a big reversal would confirm this move.

The shorts have returned to the financial sector today. Let them short, and see them cover later. More fuel for a rally.

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

As the market turmoil continues, Jay Leno reported last night that former Lehman CEO Dick Fuld got punched in the face at the Lehman gym by an employee. When I read the reports about the incident I thought, "what a great idea".

These country club punks have come close to destroying the U.S. financial system, padded their pockets with millions, and have caused billions of dollars of destruction in the way of 401k losses. A punch in the face should be followed by an immediate visit to a firing squad at Ft. Levenworth. What these people have done is treasonous, and a direct threat to the national and financial security of our nation.

At this stage of the game, I think one of two theories about our markets and nation exists;

1) We will recover, solutions will be successfully implemented, the stock market will rebound, stabilize, and then recover.

2) We are no better than some piss poor South American country, and we will live in filth and poverty for the rest of our lives.

Since I don't believe we are the latter, the markets and the economy will survive, and eventually thrive.

I have to go, believe it or not I am buying since I have faith in our nation.

I have told told you for the past few years that Wall Street was a bunch of crooks. Do you believe me now?

In 2000, after the dot-con scandal, the lying and cheating by Wall Street firms and their analysts went virtually unpunished. Since justice seems to elude the Wall Street Gang, it may be best to use a left jab and a right hook!

I'll have more for you in the Weekend Briefing.

If you have never experienced a market crash before, welcome to the club. At this stage of the game, you can forget about all economic data. Just throw it away. For the next few months (3-6) you can expect; lower inflation, higher unemployment, less consumer spending, lower home prices, and tighter credit standards by banks.

As the credit markets remain in turmoil, I believe owning stock in some of the biggest blue chip names are actually safer than cash. In my opinion, most of the risk has been rung out of many blue chip names, and I would rather own Coca-Cola (KO) and Exxon-Mobil (XOM) than a large cash hoard in a money market account.

Last week many hedge funds imploded, and energy stocks sold off to levels that reflect an oil price of $40-$50/bbl. As this happened, I few thoughts crossed my mind. The first one may shock you.

1) Was the energy crisis for real, or a giant hoax?

This is a legitimate question. I have addressed this question in prior articles (September 4, 2008- Political Conventions- Lies, Failed Promises, and Same Old Tactics.).

In the past, every energy crisis since the early 1970's had a strange way of disappearing over time. In order to understand what is going to happen in the future, we need to understand what has happen in the past.

Don't you find it odd that with every crisis, and every mania, the the media and Wall Street wanted us to believe "it is different this time".

If the current energy crisis magically corrects itself as it has in the past, you will know that you have been screwed (again) by the aristocrats that control the supply, the price. With help from the media, they sold consumers on the idea that there is an energy crisis.

We have seen this act before. And as the idea of an energy crisis took hold, a mad dash toward alternatives took center stage.

Oh, and what will happen to all those wonderful alternative energy ideas?

During the oil crisis in 1980, Exxon spent $5 billion on the Colony Oil Shale Project in Colorado. Two years later, oil prices declined, and May 2, 1982 became known as "Black Sunday" when Exxon abandoned the project, laid off 2,000 workers, and left behind a trail of foreclosures and empty oil shale mines.

During the Carter years, solar panels were placed on the roof of the White House. When Ronald Reagan took office, he said, take that crap off my roof.

2) Are oil prices dropping because of slowing demand, or the signaling of a political shift in Washington?

Many years ago, a wise investor told me to buy oil and defense stocks when a Republican is in the White House. If a Democrat is in the White House, buy technology stocks, sell oil and defense stocks, and watch your wallet.

So, was the energy crisis a giant hoax? We will see over the next year or two.

I don't expect oil prices to decline much from current levels. In fact, I am expecting a rebound as the Feds massive bailout program adds to the nations debt, and in turn puts pressure on the U.S. dollar. Once the stock market and the economy stabilizes, oil prices and oil stocks will rebound.

Already, some parts of the nation are experiencing early snowfalls, and as winter approaches demand for heating oil and energy will cause prices to rise. OPEC will hold an emergency meeting in November, and you can bet production cuts will be implemented if prices remain at current levels.

At very least, I think we'll have a good trading opportunity in oil.

Our Current Crisis- The Stock Market

There is no deigning it, the current credit crisis is serious . But once again, Wall Street, with help from their favorite conduit, the media, have conjured up a fear campaign that would scare the heck out of even the most sophisticated investor. The word they are using to scare you is... "Depression".

I don't care what media source you use, you have heard that the current financial crisis has all the earmarks of another "Great Depression".

Today I read where sales of large home safes were up over 50% the past three weeks. Consumers were pulling money out of banks and storing cash in the safes at home.

All this panic and fearing gripping the nation may be signaling an important bottom in the stock market, and eventually the economy.

Spotting a market top or bottom is not always easy. Investors always let their emotions control their actions. They get caught up in euphoria's, hype's, and hysteria's of the moment. We saw this with the NASDAQ in 1999, and with Real Estate in 2004.

Unless I am way off base, I think you will see some very powerful forces entering the stock and credit markets over the next few weeks, and once again we will see that the emotions of investors led them down the wrong path.

History has shown that the best time to buy stocks is when it is most people are scared. After several days of heavy selling, and massive losses, the majority of investors are scared and discouraged. Now that investor greed has turned to despair, an important market bottom is somewhere near.

Here are our Top 10 ETF's for the week of October 13th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) FXF: Currency Shares Swiss Franc Trust
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) KBE: KBW Bank ETF- Not Rated
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust

After the November elections and beyond, I am expecting our commodity and Oil holdings to rebound sharply.

Here are our Top 10 Fidelity Sector Funds for October 2008

1) FSCHX: Chemicals
2) FSMEX: Medical Equipment
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSRBX: Banking
10) FSVLX: Home Finance

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

Scaring investors out of the markets near important bottoms is nothing new. Getting you to buy at market tops isn't new either. Let me tell you how the game is played.

There are two books that investors should own if the are going to invest in the stock market;

1) The Book of Investment Wisdom: By Peter Krass - Wiley (1999)

This book contains essays and speeches from some of the best stock market investors throughout the history of the stock market. They give in a inside view of how the mega rich approach market cycles, and how they used great stock market crashes to build their fortunes

2) The Book of Business Wisdom: By Peter Krass - J. Wiley (1997)

This book contains essays and speeches from some of the best business leaders in our history. It takes you on a trip through time on how the legends of business handled great adversity, spotted economic bottoms, and how they prospered by taking advantage of weakness during periods of temporary economic hardships.

On page 25 of the book, "The Book of of Investment Wisdom", there is an essay written by Henry Clews.

Here are some important points that he makes and how it relates to what we are experiecing today.

Clews: "There are times when speculative syndicates get control, and by their manipulations create artificial conditions and artificial results."

How it Relates Today:

a) The Community Reivestment Act ( CRA) expanded by the Clinton Administration in 1998 contributed to the housing bubble and the subprime crisis.

b) Artificially low interest rates during the Greenspan years lead to easy credit which compounded the problem among the middle class.

c) Lax lending standards by banks "created artificial conditions" of a booming economy and "artificial results" of a booming real estate market.

Clews: "Then it is that panics are liable to occur; in fact, I doubt if there was ever a panic in Wall Street that was not due to the work of such manipulations".

How it Relates Today:

a) Wall Street was responsible for Orange County, California declaring bankruptcy in 1994 after deploying a strategy to use derivatives to earn a higher rate of return on the county's assets backfired.

b) This didn't work in Orange County, California, so Wall Street applied the same strategies again by using mortgage loans to create Structured Investment Vehicle’s (SIV’s), and Collateralized Debt Obligations (CDO’s). They repackaged these investments (??) and sold them to financial institutions and investors.

As I have said many times before, history does repeat itself.

The Stock Market

The major market averages soared yesterday after the G-8 and governments around the globe made announcements to support the global banking system. Today, government interventionists announced they would invest $250 billion in our nation's largest banks.

While there are likely to be pullbacks along the way, it looks as if the healing process has begun.

Personally, I don't like to bet against the coordinated efforts of global governments when they get serious about fixing a problem. Clearly, there will be trillions of global currencies thrown at this problem.

In the short run, the markets will rebound and the stall. The economic interruptions in September and October will take a toll on corporate profits. Consumers have sewn up their pocket books during this volatile time, but I am confident they will return as the values in their 401K plans show improvement in October and November.

So, are you still afraid at Dow 9000? I was afraid at Dow 14000.

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

For almost two years (2006-2007) I became increasingly bearish on the stock market. I preached, to almost the point of exhaustion, why I thought the real estate bubble, and massive consumer debt would cause a recession, and a severe credit crunch. It took 12-18 months for my negative views to become reality, but now I am singing a different tune.

The bad news is upon us. The problems are known. The problems are also being aggressively addressed by governments around the globe. This concerted effort- with help from trillions of dollars in capital- will eventually transition the global economy from contraction to expansion, and a bear market into a bull market. How long will it take? About 12-18 months, the same amount of time it took for my negative views to unfold.

The dismal down period is, in my opinion, the transitioning stage of a bear market into a bull market. This cyclical bottoming period is known as the accumulation phase, and no one knows this better than Warren Buffett.

Recently, Buffett (one of the world's richest men) has been deploying his mega billions into the market. He has allocated funds to General Electric (GE) and Goldman Sachs (GS).

Its interesting to watch the difference between the rich and the average investor. As Buffett was investing billions over the past few weeks, today we learned that the investing poor withdrew $65 billion from Mutual Funds last week, $8.8 billion on Friday alone. This is a classic case of how the rich get richer while the poor get poorer.

The rich get richer, and the poor get poorer because of a difference in mindset. No amount of wealth redistribution or affirmative action can change a persons mindset. We all possess the ability to govern our lives the way we wish. Some investors buy stocks when the Dow is at 14000, while others choose to sell. Some investors sell stocks at Dow 9000, while others choose to buy. Attempting to punish those who make different decisions and eventually prosper is a moral injustice.

The stock market decline over the past month was due to fears over a potential depression. Now that those fears have been dispelled, the next decline or retest of last weeks lows will be over that fact that the economy has materially slowed.

The fears from last weeks "Depression Alert" are winding down, and will eventually disappear. Credit will become more available, inflation fears are subsiding, and lower energy prices will act like a tax cut on the consumer. This means more spendable income which will eventually be reflected in the economy.

In short, I am no longer a bear. Any retest of last weeks lows, in my opinion is an opportunity to increase exposure to the stock market.

I realize its tough to buy when times are tough, and the news is bad, but it's all about mindset, isn't it? Here's a Warren Buffett quote;

"I want to buy when stock prices are down,...way down..."

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

Whenever any crisis (economic or otherwise) becomes the hot topic on the nightly talk shows, you know you are near the end of the crisis.

The topic for last nights Jay Walking segment was...Wall Street Terms. One of the questions asked was;

"What two animals signify the Stock Market? "

A young female adult answered, "The Snake and the Mouse; And We're the Mouse."

While this was not the correct answer, I have to admit that she was probably more right than we think. The Bull & Bear symbol is not an accurate depiction of Wall Street, the Snake and Mouse are.

Since the beginning of the financial markets, the Wall Street Gang have always been the "Snake" and investors have always been the "Mouse".

See, the snakes try to get you to buy at 14,000 by appealing to your sense of greed using words 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.

Now that the Wall Street snake has got you tightly grasped in its jaws, they appeal to your sense of fear by using words like;

-Is Your Money Safe?
-Wall Street Crisis
-America's Energy Crisis (not anymore?)
-Protecting Your Wealth
-Toxic Bank Debt
-The Great Depression

No one knows for sure what will happen in any bull or bear (snake) market, or whether an economic crisis will end quickly, or be prolonged. What we can do is look for signs that have ended and began bull & bear markets in the past.

Some believe it will take a catalyst to end the current bear trend. I don't agree. Past Bear market trends have ended abruptly when no one expected a turn. The buying spree came out of nowhere, and without warning.

Bull markets have ended as abruptly as well. One example is the 1987 market crash. Another example is the NASDAQ market crash that occurred in March of 2000. There were no catalysts or occurrences, and no news items that sparked the massive sell off. It just happened.

Someone, some group, some powerful force has the ability push a few buttons and create massive sell offs as well as massive rallies.

For example. Some blame the mutual funds and pension funds for the NASDAQ crash in 2000. This is impossible for these reasons;

1) Every mutual fund and pension fund had to, in concert, agree to sell at the same time on the same day. There is no way this happened.

2) Mutual funds and pension funds took massive losses during the decline.

So, if the mutual funds and pension funds were not the ones responsible for the massive sell-off during the NASDAQ crash---WHO WAS???

Some believe it is the President's Working Group on Financial Markets- aka- "The Plunge Protection Team". Some believe there is a more powerful force than that.

President Woodrow Wilson once said...

Since I entered politics, I have chiefly had mens views confided to me privately. Some of the biggest men in the United States-in fields of commerce and manufacturing-are afraid of somebody. They know that their is power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so perverse, that they had better not speak of condemnation of it."

And, Franklin Roosevelt said in a letter...

"A financial element in the large centers has owned the government since the days of Andrew Jackson".

I'm not smart enough to know when this market crisis will end. One thing I am convinced of is there is a force out there that can make it happen.

So now that the snake is the new symbol of Wall Street, I suggest you become a cat and not a mouse. Cats are very nimble, and while they may not kill a snake, they pester them enough to make them go away.

The Market

Yesterday, selling in the markets accelerated after Fed Chairman Ben Bernanke said that an economic recovery will "not happen right away." In addition, the Fed's Beige Book showed a broad slowdown in economic activity in September.

Keep in mind that the massive government intervention of cash will eventually help thaw out the credit markets. When this happens investors will get their confidence back and return to the market.

The VIX Index (CBOE Volatility Index) rose to 69.25, just shy of the number reached last Friday at 70, indicating fear and panic. Yesterday's sell-off was on low volume which indicates investors are waiting on the sidelines as hedge funds continue to sell at any price.

Clearly, we are seeing a retest of last weeks lows, and if successful, the lows for this cycle may be in.

Oil prices closed below $75 a barrel for the first time in more than a year, and gasoline prices fell to February 2007 levels. The relief at the gas pumps will help the gloomy mood that investors have felt over the past 20 months.

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

In today's NY Times Op-Ed section, Warren Buffett said;

"I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities."

Buffett gave a more detailed explanation- Read it here- but he went on to say;

"Why?"

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors."

The Stock Market

It's going to be fun to watch the smart money buy while the "I want it now generation" battles with the idea of whether to get in, hold on, or buy back what they sold last week.

Here's my philosophy, and the advantage we have as savvy investors. 10% corrections are normal. 20% corrections are rare. 40%++ corrections are a once in a investing lifetime occurrence.

A 40%++ downturn in the stock market gives investors an opportunity to double their wealth. Within a 40% downturn, many high quality stocks decline 50-70%. Patiently buying quality over time eventually pays off.

The wild swings in the stock market are opportunities. Grab them while you can. I have taken great pleasure in watching hedge funds blow up, and drive prices of many highly quality stocks to ridiculously low levels. Their loss is our gain.

Yesterday, the DJIA reversed a 380 point loss deficit to close up 401 points on the day. I believe Buffett's comments above will restore some confidence in the market, and make investors understand that the current credit crunch is not permanent.

The CBOE Volatility Index, the VIX, reached record fear levels again yesterday, hitting 81.17 intraday.

Today is option expiration, so look for the extreme volatility to continue.

The Rest of the Story

I'm tired of hearing about the election. Our two choices are really bad.

McCain will continue the war in Iraq, and that's sad. Iraq is obviously a bad place, and Sadam was a bad guy, but there are a lot of bad places with bad people, but they don't have any oil. That's what Iraq is about-in my opinion.

The community leader, Obama, would not be my pick either. Another sad choice. What's equally as sad is the racial divide among some voters. They aren't concerned with the issues, and that is obvious from the interview below.

Here is a Howard Stern interview with some blacks in Harlem as they were asked if they would vote for Obama while presenting them with McCain's views. I think you'll be shocked by the responses.

Now let's get to George W. Bush. I like Bush, and he's probably a great guy. But, clearly he is not running the country. It's obvious that everything he does, and everything he says, comes from someone behind the scenes. Who are these people? Whoever they are, they have just about destroyed the U.S., economy, and our reputation around the globe. Even worse, they have destroyed his legacy. That's sad.

You and I, put in the same situation as George, would have resigned at the same time as many cabinet members, and Generals, who have quit because of the war in Iraq. I really feel sorry for Mr. Bush.

The Wall Street elite. Will they ever get what is coming to them? Life in prison would be too nice. If the lying and cheating from the investment banks in 2000 is any indicator, they will make an example out of a few, and let the rest go. Remember, it's all interconnected- Washington and Wall Street.

Let me tell you the good news. Four years from now, the stock market will be at new all time highs, and the economy will will be firing on all cylinders. It doesn't matter who becomes President in the next few weeks. In fact, Gecko, the GEICO lizard could be the next President, at the end of 4 years he would look like a hero, and be re-elected for a second term. This is what I think will happen to the next President.

No matter who is in the White House, the economy will be back on its feet sooner than anyone had ever imagined. With the ingenuity of American business, and the spending habits of consumers, the U.S. Economy will emerge stronger than ever.

Here are a few predictions for the short run;

1) Consumer spending will not be as dire as most pundits are predicting. I have faith that if the consumer has a dollar in his/her pocket, they will spend it. Why? It has become a habit. The attitudes of people today are very different from the conservative habits in years past. In fact, I don't believe there are many fiscal or social conservatives left.

Here are the attitudes I see;

a) Live for today because you might not be here tomorrow.

b) The people I see who vote for conservative candidates do so for selfish reasons (taxes, or business). They do not live their social lives conservatively which explains the constant shift to the left in their behaviors.

c) Keeping up with the Joneses will continue to be extremely important. Just look at the cars people drive. BMW. Lexus, and Mercedes make automobiles that cost as much as vehicles made by the U.S. big 3. Middle class consumers choose the foreign brands because they are status symbols.

Oh, by the way. General Motors (GM) is now the third largest car manufacturer in the world trailing behind Matchbox, and Tonka. Don't count GM out though. They may be the rebound king over the next 2-3 years.

Here are a few status symbol stocks connected to the wannabee middle class;

Coach Inc. (COH)
Best Buy Co. Inc. (BBY)
Research In Motion Ltd. (RIMM)
Nordstrom Inc. (JWN)
Liz Claiborne Inc. (LIZ)
AnnTaylor Stores Corp. (ANN)
Starbucks Corp. (SBUX)
Saks Inc. (SKS)

d) Young adults and teens will spend everything they have. Why? This is the only thing they know.

The parents of this group have raised a generation of instant gratification consumers. This demographic group since birth have pestered their parents with the words “I want, I want, I want”.

When I was a teen, if we wanted to go somewhere, we borrowed mom and dad's car. Today however, many teens have their own car. Parents feel guilty if they don’t give in to their teens’ demands for cars, clothes, and electronics because their peers already have these things.

Sex appeal is also very important to young adults and teens, so looking the part has also become a habit.

Here are a few stocks connected to teen and young adult demand;

Apple Computer (AAPL)
Electronic Arts Inc. (ERTS)
Abercrombie & Fitch Co. (ANF)
Activision Blizzard (ATVI)
American Eagle (AEO)

The bottom-line is I don't believe the economy will be down as long as the pundits on TV are claiming. In fact, I am very suspicious of their motivations, and market predictions regardless of the economic environment.

Studies have shown that 10% of American households (the minority) held 61.1 percent of the nation's wealth. Another study showed that among the poor, 1% of the population controls the U.S. aluminum-can wealth.

So, you have a choice, follow the 10% minority that controls our nations wealth, or follow the 1% of the population controls the U.S. aluminum-can wealth.

Contrarian thinking is nothing more than siding with the minority view.

Here are our Top 10 ETF's for the week of October 20th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) FXF: Currency Shares Swiss Franc Trust
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) KBE: KBW Bank ETF- Not Rated
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust

After the November elections and beyond, I am expecting our commodity and Oil holdings to rebound sharply.

Here are our Top 10 Fidelity Sector Funds for October 2008

1) FSCHX: Chemicals
2) FSMEX: Medical Equipment
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSRBX: Banking
10) FSVLX: Home Finance

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

As a child, I remember my grandfather, an immigrant from Armenia, watching the evening news. As various news events were highlighted as "very important", my grandfather, in broken english would say, "ya, sure, nothing but hooey".

Hooey: dictionary.com- Hooey! You know that's not true.

There is a lot of "hooey" on the airwaves today. From Wall Street, to Main Street, to politics, and the Middle East, "we hear nothing but "hooey".

Bulls at the Top

This brings me to the energy crisis (?). Sure, we all know, or have been told that energy demand is increasing world wide. But, and this is a big but, every energy crisis since the early 1970's had a strange way of disappearing over time.

But the energy crisis had to be real. After all, how many interviews did you see on financial TV telling you we were running out of oil?

They powers in charge do not want you to know what is happening, and they also know that consumers have short memories. If the energy crisis slowly disappears over the next 5 or so years, you will know that your money has been a source of wealth for the oil cartel, and you were suckered into one of the biggest con-jobs ever perpetrated on mankind. This is exactly what happened in the 1970's,1980's, and possibly again in the 21st century.

So, is the current decline in energy prices for real, or is it the "Election Year Magic" that I have been harping on since we sold oil in June?

If it was a con-job, we will find out in the months and years ahead. If it was just "Election Year Magic", look for oil prices to rebound after the election.

Oh, by the way, now that oil prices have dropped, have you noticed that T. Boone Pickens isn't advertising his alternative energy plan on TV anymore?

Bears at the Bottom

This morning's guest host on CNBC was the New York University economics professor, and resident perma-bear, Nouriel Roubini.

Here's what I know about economists;

Years ago, when I worked as a broker with A.G. Edwards, I was in Puerto Rico a company trip. There was a small island about 300 yards from our hotel, and the only way to get there was by boat.

My wife and I were on this small boat with 3 others. They included the A.G. Edwards chief economists, a a bearded man with long hair and a ponytail, and the driver of the boat. All the A.G. Edwards guys had conservative, business like appearances, so obviously the man with the beard and long hair looked out of place. This prompted a question to the bearded man from our conservatively looking economists.

He said;

"Hi, I'm Ray Worseck". The bearded man said hello and said his name as well.

The magician said, "We both deal in illusions!"

The other thing I know about economists is they are great second guessers. They can't tell you what is going to happen, they can only tell you what has happened, or the probabilities of something happening.

Christina Romer, professor of economics at the University of California, Berkeley, said;

Economists can't predict recessions for the same reason stock market analysts can't accurately predict market crashes. "Both kinds of events, by their nature, are not predictable events,". Almost all the postwar recessions were preceded by a shock, like a spike in short-term interest rates, or a sharp rise in oil prices. "It's impossible to see the shocks coming."

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

Don't waste your time try to convince yourself that we live in a free market society. We don't. Our so called system of free and open markets are nothing more than a playground for crooks whose main goal is to steal your wealth by manipulating your emotions.

I am amazed by the negativity of the news media during this brief economic downturn. Almost in concert, the media has lambasted the economy and stock market. I don't believe this uniform negativity is coincidental or by accident.

If you read about the history of the markets, you'll see that the plan by Wall Street gang for years has been to scare the small investor, get them to sell, while the big boys buy. I'm convinced this is what is happening today.

If you browse the sentiment indicators, they are all flashing buy;

Yesterday, the VIX hit an intraday record high of 85. The seasonally negative period for the markets ends this month, while the seasonally positive period (Nov.-Jan) begins next month.

Even with the many indicators flashing buy, markets can remain very oversold within a trading range for some time.

I am convinced that what we are witnessing may be by design. I believe some very rich investors are spreading fear and doom through the media to pick up stocks on the cheap. Its all part of that free market (?) stuff you keep hearing about.

As small investors, you are constantly on a "need to know" basis when it comes to information. Heck, we can't even get the FDIC to tell us the truth. For example, was Wachovia Bank (WB) ever on the FDIC's problem bank list? The answer is NO! But who was involved in the initial buyout arrangement with Wachovia and CitiGroup? Yep, the FDIC!

Paraphrasing comedian George Carlin, "Its all BS folks, and its bad for ya".

Access to valuable information is not for you and I. Some people are in the know, but it's not us.

Oil prices have dropped from $145 to $68, a drop of 53%. Has oil demand worldwide dropped 53 percent? I don't think so.

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

Bear markets are often said to have five stages of grief: denial, anger, negotiation, depression and acceptance.

Hopefully, today, we can enter and complete the final stage which is acceptance. This would be a large selling climax, also know as the capitulation phase.

Technically speaking, a severe washout on the downside would bring the major market averages to levels not seen since 2002.

I am not confident enough to say we will actually see these levels, but it is possible. Frankly, I have been hoping for a final washout, because the daily drips to the downside are much more frustrating.

They are;

S&P500: 768-788
DJIA: 7,197-7,417
NASDAQ: 1,108-1,253.

Mark Hulbert, of Hulbert Financial Digest, believes that we have entered into a once in a multi-decade buying opportunity. He wrote this piece on Value Line's Median Appreciation Potential (VLMAP), for MarketWatch.

Apparently, the VLMAP market timing indicator dates back to the 1960's, and has a ranged from a low of 17 to a high of 255. Over the past 20 years, it has had a low of 30, and a high of 135. The 135 number is highest level over this 20 year period. The VLMAP measures the risk-reward ratio for stocks to be attractive only if the number goes above 100.

The VLMAP has only been above 100 twice over the past ten years. Once after the 911 attacks (105), and again at the bottom of the bear market during the 2000-2002 time frame (115).

I've been buying stocks since 1973, and this is the best buying opportunity I have ever witnessed. I don't know if we are at the bottom (who does), but the market has my vote given we are 40%++ off the highs.

I was watching an interview with Michael Moore on Larry King last night. Moore has been viciously demonized by the right-wing, and wrongly so in my opinion. I happen to be a conservative, but I am not closed minded and dumb. You can't be closed minded if you want to succeed in the stock market. You have to be open to any and all possibilities that what is universally accepted as factual may or may not be true.

When Moore was asked what he thought was going on in the stock market, he replied (to the best of my memory);

"The Republicans were like invited guests to dinner for 8 years. Now they are being told to leave, and they are cashing everything in, and stealing the silverware as well."

I thought that was a great quote.

Based on my comments above, I'll bet you think I'm going to vote for Obama? Well, no I'm not. I am not voting for McCain either. I am going to vote for the candidate I believe is not controlled by the globalists, bankers, Bilderberg, CFR, on any other anti-American group. I may have to write someone in at the bottom of the ballet.

What we are witnessing in the equity markets and the economy is a good dose of discipline. In fact, since consumers and the public cannot discipline themselves, the economy and stock market is doing it for them.

I have said it many times before, people's behaviors and attitudes are the worst I have ever seen. Corruption on Wall Street has permeated to Main Street. It has turned into a full blown endemic.

Society has failed to recognize its own corruption, and has become materialistic to a point where nothing is sacred anymore. Material wealth, greed, and selfishness is being unwound, and people who embrace this attitude are being humbled.

Once the disciplining process is completed, and the hearts of our leaders and citizens are humbled, the economy can begin to heal, and the stock market will rise.

There is an all out, concerted effort, by the news media and many market pundints, to talk down the economy and the stock market. I think you'll see, in do time, why this was being done. Talking down the economy to the masses eventually becomes a self fulfilling prophesy. The media reports bad news, and the consumer acts accordingly. This is what's happening.

I can give you several reasons to be bullish, but until the elections are over, I believe investors will remain frustrated. The good news about the economy will not be carried on the airwaves until the new "chosen one" is elected President.

I am on the road, so this weeks briefing will be...Brief.

I would like to preface my comments below with a disclaimer. Since I believe politicians are bought and paid for by big money wizards behind the scenes, I am not trying to promote one candidate one over another. All I want to do is to get a vision, or understanding of what will happen in the economy and stock market over the next 4-8 years.

If you believe as I do, the free markets are not free, and haven't been for quite some time. Manipulation is the word of the day. We saw it in the energy markets over the last four years, and we saw it in the NASDAQ in the late 90's. I believe the equity markets and the economy are being "talked down" until the globalists can make sure their candidate gets in the White House.

I believe the big money wants Barrack Obama, and the current turmoil in the US economy and stock market are setting the stage for a landslide victory for the democrats.

If you pay close attention to the who, why, when, of events occuring in the economy and the stock market, you see there are always very powerful forces behind its behavior.

I was talking with a retired president of a fortune 500 company the other day. As we discussed the economy and the stock market he said, "I believe there are some very powerful sources working behind the scenes to talk down the economy, and create turmoil and confusion in the stock market." "They like do this to make sure their chosen candidate gets elected".

For example, don't you find it odd that we had a massive energy crisis in June-July, and now that reality is setting in that we may have an anti oil candidate in the White House, prices are plummeting?

In years past, I have always been told;;

-Buy energy and defense stocks when a republican is in the White House.
-Buy technology stocks when a democrat is in the White House.

This being said, I believe energy prices will rebound, but not before oil prices visit the $50/bbl level for a brief period. Think about it. A ton of money has been spent on alternative energy and the green movement. Alternative energy cannot become a reality if oil prices are cheap and affordable. Look for oil prices to rebound after the election. $85-$100/bbl??

Don't you find it odd that the bubble in the NASDAQ and technology stocks occurred when a democrat, Bill Clinton was in power. And don't you find it odd that the bubble in energy occurred when a republican, George Bush was in power.

If elected, Barrack Obama will be the first minority candidate in history to be elected to the nations highest office. The big money behind the scenes will do everything in their power to make sure he goes down in history as one of our nations best Presidents.

Here's what I believe will happen to the US economy and stock market, and I mentioned this last week;

Four years from now, the stock market will be at new all time highs, and the economy will will be firing on all cylinders. It doesn't matter who becomes President in the next few weeks. In fact, Gecko, the GEICO lizard could be the next President, at the end of 4 years he would look like a hero, and be re-elected for a second term.

No matter who is in the White House, the economy will be back on its feet sooner than anyone had ever imagined. With the ingenuity of American business, and the spending habits of consumers, the U.S. Economy will emerge stronger than ever.

With every new President over the past 20 years we have seen a seismic shift in policies, business, and our way of life.

A seismic shift occurred culturally and economically when Bill Clinton took office. Clinton convinced a democratic congress to pass NAFTA. When this happened our borders broke wide open, and corporations were given the green light to outsource US jobs overseas.

When George W. Bush was elected, NAFTA, and the outsourcing of jobs was put into overdrive. CAFTA was passed, and talks of open borders with Canada and Mexico led to the build-out of the NAFTA superhighway. And after 911, our telephone conversations were tapped. Read my September 13, 2007 post entitled, Why Warren Buffett is buying Burlington Northern (BNI)

In my opinion, the next seismic shift will occur with Barrack Obama in the White House. The stock market will rebound, and the economy will rebound. In short, Obama will look like a hero, and the nations savior.

Here are our Top 10 ETF's for the week of October 27th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) FXF: Currency Shares Swiss Franc Trust
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) KBE: KBW Bank ETF- Not Rated
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust

After the November elections and beyond, I am expecting our commodity and Oil holdings to rebound sharply. Every equity ETF in the ranking system has a poor rating, even Consumer staples. What we are witnessing is a worldwide sector sell-off.

Here are our Top 10 Fidelity Sector Funds for October 2008

1) FSCHX: Chemicals
2) FSMEX: Medical Equipment
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSRBX: Banking
10) FSVLX: Home Finance

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

Most of the pieces are in place for an economic and stock market recovery. Forced liquidations by hedge funds scared the small investor into doing some liquidating too. While hedge funds were forced to liquidate, market volatility was magnified when mutual funds had to meet redemption's. These actions led to a massive sell-off in the equity markets, but I am confident that the huge money, Mr. Potter (Its a Wonderful Life) if you will, was buying.

When Treasury Secretary Hank Paulsen gave the top banks $25 billion each, he gave then strict orders to go loan the money. Of course, Jamie Diamond CEO of J.P(Potter) Morgan said no. It just goes to show you Mr. Potter (JPMorgan) is more powerful than the Treasury Secretary.

David Rockefeller is still a major player in J.P. Morgan/Chase. He even looks like Mr. Potter.

Mr. Potter...

The final piece of the economic recovery will be the purchasing of bad mortgages by the government. Everything else is in place, and working well.

As was the case in 2000-2002, many of the major issues surrounding worthless mortgage derivatives will eventually be swept under the rug. During the 2000-2002 time frame, this issue was companies lying about their earnings, and cooking the books. They made examples out of a few of them, sent some to jail, but in reality everyone was doing it. Eventually the issue disappeared, accounting changes were made, and things got back to normal. You will see the same thing done with the SIV's, CDO's, and other concocted garbage invented by Wall Street crooks.

Here's what I think will happen over the next few weeks and months;

1) Investors (big and small) want change in Washington. They don't care who, or what the change will be. There confidence will be restored when the republicans are thrown out on the street. Until the new administration proves they are as corrupt and stupid as the past, the will be looked upon as a breathe of fresh air.

2) In my opinion, Oil prices will rebound from their depressed levels. New drilling is not economically feasible while prices are low. New energy alternatives will not be able to get off the ground if gasoline prices are seen as affordable. I am looking for $85-$100/ bbl over the coming months.

If the Dems take power in Washington, and make significant progress toward energy alternatives in the first two years, I would be a seller of most energy stocks.

3) The credit crisis will be resolved, banks will lend to responsible consumers, consumer spending will rebound, and the housing market will be stabilized by bargain hunters. Don't get me wrong, housing/ real estate will not enter a new bull market for at least 10 years. Like the NASDAQ in 2000, too many people were burned, taxes and insurance costs are too high, and real estate is not a liquid investment.

4) In my opinion, the big money to make over the next 5 years will be in the stock market. The NASDAQ is now in year 8 (2008) of its bear market, and by year 10 (2010) it should be above 3000 for the first time since 2000. The longer the dems are in office, the better the NASDAQ will do.

5) Over the next 5 years, several stocks within the consumer discretionary sector will be 2, 3,and 4 baggers. That will make investors with a little foresight very happy. At this juncture, I would sell consumer staples on any rebound, and buy consumer discretionary.

6) Banks will muddle through the mud during the first phase of the recovery, but the during the second phase, most banks that received funds from the Treasury will rebound very nicely.

7) I have been, and will continue, to accumulate stocks and funds on any declines. The bigger the decline, the better. The more the media talks about financial catastrophe, the bigger my purchases.

Please guys, don't stop now, I still have some cash available!