"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.