John Mugarian's Dynamic Growth

The next sentence sums up my continued thought process.

“Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited." - George Soros

Any way you cut it, investing in the stock market is a game of "them versus us ". A young women on the Tonight Show with Jay Leno (Jaywalking segment) was asked;

"What two animals signify the Stock Market? "

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

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". The key to success in the markets is understanding the above quote from George Soros.

Now that the Wall Street Gang, through their conduits in the media, have convinced the small investor to err on the side of caution, and to sell rallies, the "Snake" has the "Mouse" right where they want them.

At the top of the market, The "Snake" wrapped itself got the "Mouse" and squeezed them into buying. Now that the "Mouse" is no longer breathing, and clutched squarely in its jaws, the "Snake" will swallow the "Mouse" whole.

As the market zigzags higher, investors that got squeezed out of the market by the Wall Street Snakes will be taking antidepressant drugs like Lexapro, Effexor, Cymbalta, Zoloft, Paxil, and Prozac.

There is nothing more depressing than to get squeezed out of the market at the bottom only to realize later the market has enter a new bull market.

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

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

Last week I said that "Every equity ETF in the ranking system has a poor rating, even Consumer staples." Now, however, Banks and Retail have made their way into the top 25.

In my opinion, Oil prices will rebound from their depressed levels, but not skyrocket anytime soon. 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.

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.

In my opinion, the big money to make over the next 5 years will be in the stock market. 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.

Financials will rebound during the first phase of the recovery, but during the second phase, companies that received funds from the Treasury will enter a new bull market.

Here are our Top 10 Fidelity Sector Funds for November 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

After getting hammered in September and October, last week Consumer Discretionary, Energy, Industrials, Basic Materials, and Financials registered double digit gains.

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

Today is election day! Big deal. The "little people" in the U.S. scurry around like a bunch of emotionally charged ants, and don't realize that the outcome has already been predetermined. Regardless who wins, you can take confidence in knowing that both candidates are owned by the same people. Some say they belong to the bankers, corporations, and the wealthy. I would say all of these, to a certain extent, are accurate.

Remember, "Nothing Changes but the Names and the Faces".

The Stock Market

Yesterday's trading was quiet as the major market averages were little changed on light volume.

Oil prices jumped $7 per barrel this morning as the "election year magic" is winding down, and investors suddenly became more optimistic about economic growth. Here's some more magic for you, the dollar dropped against the euro causing commodity prices to rise.

You need to discount all earnings and economic reports for October, and most of September. We all know there was very little economic activity, and the final proof will show up in the next round of earnings reports.

-The ISM manufacturing index contracted in October, the fastest pace since 1982.
-Consumer confidence fell to its worst level since the index began in 1967.
-The GDP number dropped 0.3% in Q3-08.
-In October, consumers were like a deer caught in headlights.

This being said, I don't think that the trends over past few months will last. Consumers are itching to spend and Christmas is right around the corner. My prediction is spending will pick up much more than the pundits expect.

The credit markets continued to improve, and the three-month LIBOR rate dropped to the lowest level since Lehman Brothers collapsed in September.

With gas prices at more reasonable levels, look for vehicle sales to pick up, and retailers across the board are poised for better than expected gains.

If you listen to the negatives, you would think that everyone is unemployed. Even with an unemployment rate of 7,8, or 9 percent, over 90% of the country is still working and making money. Since spending has become a habit, spending will continue. For many, it's their favorite pastime.

At the ending of trading on Tuesday, the major world stock markets soared;

London's FTSE was up 4.42%, Frankfurt's DAX closed up 5.00%, and Paris' CAC finished up 4.62%. Japan's Nikkei was up 6.27%, Hong Kong's Hang Seng closed up 0.28%.

The Rest of the Story:

Some people think Barack Obama is just a common man. Someone like you and I. Don't bet on it. He has been groomed for many years.

We, as serfs work for the lords of the eastern establishment- Better known as the hierarchy. For many years now, the eastern establishment has spread its reach around the globe under the name...The Bilderberg Group.

This all powerful body holds a yearly meeting, at a secret location, and the so-called "freest country in the world"- the U.S.,- has had a virtual media blackout on the groups yearly meetings.

So, what does this mean for us? What's the big deal? If you're an investor, its of huge importance.

For example, would you like to know what sectors of the market will rise or fall in advance?

At the conclusion of each Bilderberg conference, an consensus is reached. Almost immediately the consensus objectives are implemented by their allies in the mainstream press. Here is one of them;

Bilderberg June 5-8 Meeting calls for lower oil prices.

Royal Dutch Shell

Bilderberg 2008

Other nations report on Bilderberg, but not the U.S. press.

BBC News- U.K.

Canadian Press

Edmonton Journal

The Globalists Favorite Presidential Picks

Barack Obama: Columbia University and Harvard Law School.
Bill Clinton: Georgetown University and Yale Law School
George W. Bush: Yale University and Harvard Business School
George H. W. Bush: Yale University

Do you see the Harvard and Yale dominance of our political figures? Coincidence?

Close But no Cigar List

John Kerry: Yale University
Hillary Clinton: Wellesley College and Yale Law School

Did Hillary and Obama Meet with Bilderberg in June?

The NorthStatesman

If Obama wins, these Bilderberg names were mentioned this morning by the financial media as the next possible Federal Reserve Chairman or Treasury Secretary;

Timothy F. Geithner (attended 2004 & 2008 meetings), current President of the Federal Reserve Bank of New York

Paul Volcker, former Chairman of the Federal Reserve

The Best Presidential Candidate was not from Harvard, Yale or Bilderberg

Ronald Reagan: Eureka College

From where I sit, the republicans ran a very bad campaign. I caught part of a McCain-Palin interview on Larry King. McCain was asked what was his #1 priority- he said, "national defense". Wrong answer during what is perceived as bad economic times.

McCain was also fixated on the war in Iraq. Another very bad priority choice. If I were running for President, and want to lose the election, I would have said the very same thing.

So, I believe the democrats will run the table during this election. I wouldn't get too emotional however, now you know who they work for. Let the redistribution of wealth begin!

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

Sometimes I wonder why I am doing this (writing a blog). Attempting to peel opened the cemented eyelids of the public is a very difficult thing to do. I can do what many others do, and provide you with mundane market and economic insights, but unless you know what the people behind the curtain are doing, your wasting your time.

As I watched the two candidates speak last night, two things struck me right off the bat;

1) John McCain's concession speech was the best one he gave during the entire campaign. Unlike his past speeches read off the teleprompter, he did not stumble and bumble his words. It was as if he had been practicing this speech for several weeks, and I bet he was.

2) Barrack Obama's speech,while good, did not have the flare and magnetism of almost every speech he has given all year. His big inviting smile was not a prevalent, and the massive crowd in Chicago did not get the fiery, enthusiastic words that they all came to hear.

While it was a very emotional time for many supporters, is Obama really going to be the same person that many are hoping for once he takes the oath of office? Is he really going to be the person that many minorities, and hurting American's had hoped for? Is he really going to be the person that lifts up the millions of Americans hurt by the elitists, or is he just another front man for globalism?

I really hope and pray that he follows through on his campaign promises. I really hope that Obama transforms millions of Americans into well educated, productive, and prosperous citizens. He can do this by example as witnessed by his wonderful, and well educated family.

Oddly, and not to burst your bubble, some evidence already implies that Obama may be a tool for Bilderberg.

After the democratic primary, Nancy Pelosi arranged a meeting with Barrack Obama and Hillary Clinton to mend their differences. Oddly, a few miles away from the arranged meeting the Bilderberg Group met secretly (June 5-8) at the Westfields Marriott near Washington Dulles
International Airport in Chantilly, Virginia.

On the campaign trail, candidates are always accessible and accounted for by the media. For a few hours, Obama disappeared and the media couldn't find him. They questioned one of his advisors on the Obama airplane- See Video

The bottom-line in this enlightenment exercise is we as investors need to look beyond the political rhetoric, and understand that behind every politician there is someone or something much more powerful than themselves.

Many investors believe a President Obama will be harmful to stocks in the healthcare sector, in particular, managed health insurers. One of Obama's biggest supporters is Warren Buffett. Despite his ardent support, Buffett owns sizable positions in healthcare companies such as WellPoint (WLP) and Unitedhealth Group (UNH).

My guess is many of the promises during the campaign will remain...just promises. I do believe the economy and the stock market will be firing on all cylinders by Obama's 3rd and 4th year. He will of course be credited with the victory.

Today's Market

The major market averages greeted yesterday's democratic sweep with a 486 point loss in the Dow, a 53 point loss in the S&P, and a 98 point loss in the NASDAQ.

The ISM non-manufacturing index fell for the sixth time in ten months, and a survey of employment showed a greater decline in jobs. Rumors also surfaced that General Motors (GM) was facing the possibility of bankruptcy.

Crude oil declined about $5 a barrel as U.S. gasoline supplies showed an increase.

Some things are just obvious. Every big rally in the last 6 weeks has been met by selling pressure from hedge funds, and guests on the various financial networks have convinced investors that every rally should be sold.

On the flip side, every sell-off has been met with buying pressure. The smart money likes to invest in the markets during periods of turmoil, and these investors will hold positions until the next bull market begins to mature. I believe the smart money is accumulating at these levels, and they will not sell for another three to four years.

Below is a excerpt from "The Book of Business Wisdom" edited by Peter Krass. On page 421, there is a chapter entitled "How to Make Money on Wall Street" by Henry Clews.

During the late nineteenth century, Clews saw firsthand, and understood how Wall Street worked. In his book, "How to Make Money on Wall Street", Clews revealed some shocking stories of political and economic manipulation.

The nuts and bolts lesson from Crews is that regardless of the investment, investor emotions often cause serious mistakes.

While it's easy to get rapped up in manias and hype's (I.E. - The NASDAQ in 2000, Real Estate, Dow 12,000?) the big money is made when there is blood in the streets and widespread pessimism.

"How to Make Money on Wall Street" by Henry Clews;

Few [traders] gain sufficient experience in Wall Street to command success until they reach that period in life in which they have one foot in the grave.

'Those who follow this method always succeed. There has hardly been a year within my recollection, going back nearly 30 years, when there have not been 2-3 squalls in the Street, when it was possible to purchase stocks below their intrinsic value".

Intrinsic Value ? Haven't we heard this term used by Warren Buffett?

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

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

Here are our Top 10 Fidelity Sector Funds for November 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

I believe the stock market will begin to recover when investors see;

1) Obama will move more to the center, provide a stimulus package for the middle class,and delay tax increases until the economy recovers.

2) Mark to Market accounting rules are changed.

Valuations today are compelling. This is why the stock market seems to be stuck in a trading range from around 8000 to north of 9000.

In the mid 1990's we went through the same scare tactics as today relating to the pricing of derivative instruments. The Orange County, California's government bankruptcy was caused by abuses in derivatives. We are going through the same thing today, but on a national scale.

In 2000, former Senator Phil Gramm helped pass the Commodities Futures Modernization Act which deregulated the derivatives market. Thanks, Phil.

In 2003, Warren Buffett said;

"Another problem about derivatives is that they can exacerbate trouble that a corporation has run into for completely unrelated reasons," he wrote in his annual letter to shareholders. "This pile-on effect occurs because many derivatives contracts require that a company suffering a credit downgrade immediately supply collateral to counterparties. Imagine, then, that a company is downgraded because of general adversity and that its derivatives instantly kick in with their requirement, imposing an unexpected and enormous demand for cash collateral on the company. The need to meet this demand can then throw the company into a liquidity crisis that may, in some cases, trigger still more downgrades. It all becomes a spiral that can lead to a corporate meltdown."

If you stop and think about it, a zero coupon Treasury bond can be classified as a derivative instrument. If you bought a zero coupon Treasury bond with a 20 or 30 year maturity date, all you know for sure is how much it was worth when it was born, and how much it is worth when it matures. In the interim, it fluctuates in value according to what is happening with interest rates.

The difference today is zero coupon Treasury bonds have a secondary market in which they trade, but many of the derivative instruments creating havoc do not. Once the Mark to Market accounting rules are changed, the bonds in question can be held on corporate books as investments held to maturity. This will eventually allow the secondary market to open back up creating a viable mechanism for trading.

Let AIG Fail

Bailouts and loans for some businesses are a must, but not for AIG.

Letting AIG fail would not have resulted in the economic collapse that many claim. In past years when an insurance company got in trouble, the company was seized by the state insurance commissioner, and the various businesses of the defunct company were distributed to other insurance companies.

For years the insurance industry boasted to holders of annuities and insurance policies that they always took care of their own. They prided themselves on knowing that when one company went bankrupt, the companies within the industry would pick up the pieces, and assume the existing business lines.

This is what should happened with AIG.

What Should the Punishment be for Corporate Crooks on Wall Street?

You tell me. What punishment should a group of people get for stealing your money, padding their pockets with millions while driving the U.S. economy to the brink of a depression.

In 2004, the Chinese had a great idea!

Beijing cracks down on financial crime ahead of big IPOs

Updated: 9:44 a.m. ET Sept. 14, 2004 BEIJING - China executed four people, including employees of two of its Big Four state banks, for fraud totaling $15 million, the Xinhua state news agency said on Tuesday, amidst a high-profile campaign against financial crime.

Legal experts have called for a "kill fewer, kill carefully" policy for non-violent crimes.

So, how did we get in this mess in the first place? Here is an interesting article- Globalresearch.

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

Fears over the banking system collapsing are subsiding. The TARP program by the Fed and the Treasury are working. Now that those fears have abated, consumers with jobs are beginning to spend again.

Last weekend we went to a large outlet mall and the parking lot was jammed, and people were buying.

As expected, spending came to a screeching halt in October. The reasons are obvious. Increased spending will continue to be strain for consumers who have been laid off, and for those who have used credit lines as ATM's, but for the 90++ percent with jobs, spending will pick back up.

The stock market will look beyond the current turmoil months before the economy stabilizes. This is a faith in the future that better times lie ahead. The currently glum market environment creates short term investors very shortsighted views.

Those of us who have been around a while realize that recessions are followed by recoveries, and bear markets eventually become bull markets.

Here is an interesting piece of news, the Chinese government announced they would spend $586 billion over the next two years in order to stimulate the economy. This new stimulus package amounts to about 15% of the GDP in China, and the money will be used on infrastructure spending, tax rebates, and aid for the rural economy. I am expecting an upturn in energy and commodity prices in the new year.

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

The investment community has impressed the importance of timing the market over the ultra successful method of time in the market. As I study the great investors of the past, they all say the same thing.

Famed investor Jim Rogers once told me, "I'm a terrible market timer." He also said, "I'm a three year investor". What does this mean? I'll tell you in a moment.

Warren Buffett has been quoted as saying, "I don't time the market, so I don't take the effort to generate an opinion on its level."

Once you understand that investing is more about time, than timing, you can make rational decisions. Buffett said, I do my homework, make the investment and let it ride for the long haul.

So, in times such as these, you place your bets, and come back another day in the future when economic times have improved. Just turn off the volume while watching the financial channels, and you'll feel remarkably better by the end of the day. In warren Buffett's new book, "The Snowman", he admits to watching CNBC during the day, but the volume is on MUTE. You would be much better off if you did the same thing.

Market Comments

Yesterday, the major market averages closed down sharply;

DJIA: 8,282.66, down 411.30
S&P 500: 852.30, down 46.65
Nasdaq Composite: 1,499.20, down 81.70

The declines came after Treasury Secretary Henry Paulson shifted gears on government's financial rescue plan to buy up troubled mortgage assets. There had to be a reason for this change, and I believe in the coming weeks we will hear that the mark to market accounting rules will be changed.

The other shoe to drop was Best Buy (BBY). The company said "it has never seen such difficult times for consumers". That was October, I am betting that going forward Best Buy will see sales pick up during the Christmas shopping season.

In another twist, American Express (AXP) said it wants to become a bank and get $3.5 billion from the federal government.

What we are witnessing is a good ole dose of gloom and doom. I realize it's tough to look at the monthly values on your account statements, but these things you have to ignore.

The bull may be dead for now, but it's our job to find the best cuts of meat (stocks) so that later we can feast on NY strips, filet mignons, rib-eyes, and T-bones.

Here are some of the purchases and values of some of Warren Buffett's recent stock purchases;

IR: Paid $36-$46/ Closing price $14.85
NRG: Paid $40-$44/ Closing price $21.60
SNY: Paid $32-$38/ Closing price $29.11
BNI: Paid $76-$92/ Closing price $81.65

Don't feel bad about your timing, Buffett's wasn't all that good either.

Pessimism continues to be high. The CBOE Volatility indicator (66.46, VIX) and NASDAQ 100 Volatility (65.33, VXN) closed near their highs, and the CBOE put/call ratio is back near the highs made on Oct 10 when the major averages made their intraday lows.

On Bill Cara's website, Bill did a great job with this chart which correlates the S&P 500 from May 15, 2008 through November 11, 2008 with the bear market of April 2, 1974 through April 1, 1975. Take a look.

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

Is there anyone on the planet, with half their brains tied behind their back, that didn't know retail sales were going to be way down in October? Consumers were more worried about their bank collapsing than buying new stuff at the malls. Now that the FDIC has raised the deposit insurance for banks, consumers are more at ease.

The consumer was like a deer caught in the headlights of an oncoming car. We saw a similar situation in 2000 when the US presidential election of Bush vs Gore was tied up in court during the all important shopping months of November and December. Deja vu?

As the earnings and retail sales numbers are released, executives at many retailers will take this window of opportunity to get the street to lower earnings expectations. Why? Going forward, lowered expectations will be easier to beat. CEO's live for days such as these.

Going forward, beating lowered expectations sets the stage for a new round of earnings surprises on the upside which translates into higher stock prices. Take for example Best Buy (BBY). Now that Circuit City has filed for bankruptcy, BBY has a virtual monopoly on the retail electronics business.

Yesterday, BBY CEO Brad Anderson said that this “the most difficult climate we’ve ever seen.” You know as well as I do, with technology as advanced as it is, that the executives at the Best Buy headquarters see the daily sales figures. So, if the daily numbers were bad, and I believe they were, why was the company's chairman-director buying 1,682,800 shares at a cost of $42,790,763.00 in the open market?

This is a simple game of buy tons of the stock, lower your expectations, beat the expectations over the next 16 quarters, and get rich. As I said above, " Let the Games Begin!"

Hedge funds around the globe continue to get axe murdered as witnessed by Friday's late day sell-off. Given the crumbling of many high profile institutions, and the ineptness of the US government, if you didn't know better, you would think we live in some piss poor South American country.

Clearly, given all the corruption and greed on Wall Street, you can see that we live in one of the most corrupt country's in the world. Our politicians have no business calling any other nation corrupt. I suggest they look in the mirror.

From Bill Clinton's antics in the oval office (Monica Lewensky), to Larry Craig, Ted Stevens, and the like, an extreme house cleaning must take place. This being said, it will never happen. Why? It looks as if many in society have joined their party.

America is going through a disciplining process. How long it will last is anybody's guess. My suspicious side tells me that the powers on Wall Street are waiting for their savior to take office. And once he does, the mood and sentiment towards the financial markets will change.

Right now the moods of investors are being controlled by the media. The "depression word" is being thrown around so much that it is only second to the famous scare word- nine eleven (9-11).

Unless I am way off base, I think you see an immediate shift in sentiment once Barrack Obama takes office. At this point, investors could careless who changes the negative sentiment in the country, they just want it to change. Once sentiment changes, so will the moods of investors, consumers, and corporations. The economy will begin to turn, corporations will begin to hire, and by 2012, President Obama will look like a hero.

Investing in anything requires faith in the future and confidence. I believe the media will make sure we have confidence in the new administration through their daily broadcasts. In turn, investors will begin looking beyond the valley of the recession, the economy will stabilize, and the stock market will rally.

What Should the Punishment be for Corporate Crooks on Wall Street- Part 2

On Tuesday, November 11th I referenced an article where "China executed four people, including employees of two of its Big Four state banks, for fraud totaling $15 million."

I would venture to say that China's government has a handle on their corporate crooks. Unfortunately, we don't. Maybe our governments needs to take some notes.

Here is an article where China again executed the former head of its food and drug administration for approving untested medicine in exchange for cash.

Our court system failed to discipline Wall Streeters in 2000 for issuing bogus research reports to investors. Now the lying and cheating is back in full force. Let's deport this criminals to China and let them handle these guys. We may have to send a few politicians and judges along with them.

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

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

Here are our Top 10 Fidelity Sector Funds for November 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

For the Week:

The October unemployment rate rose to 6.5% following a 6.1% rate in September. The Nonfarm payrolls in October dropped 240,000, and September figures were revised to a loss of 289,000 from a reported loss of 159,000.

The European Union officially slipped into a recession in the third quarter, but here in the US officials are holding off making the same declaration. Unbelievable!

Citigroup announced it was cutting an additional 10,000 jobs to go along with the 23,000 already it had announced. The Labor Department reported that jobless claims have already reached a seven-year high. More are on the way.

Of course with a loss of jobs comes lower sales. The Commerce Department reported that retail sales fell 2.8% in October, a record, and the worst in 16 years. Consumers account for 70% of GDP, and retailers are faced with a tough holiday shopping season.

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

It's mind boggling, isn't it? Investors are starring at a year over year decline of about 45% on the S&P 500, corporate giants such as General Electric (GE: 16.02 down -58% from its 52 week highs) and America Express (AXP: 19.35 down -67% from its 52 week highs), and many other high quality stocks down across the board.

Oddly, P/E ratios are down for some companies to levels where Warren Buffett accumulated and made his fortune several decades ago. The question of course is how many investors have the staying power of Mr. Buffett to allow themselves to do the same in the years ahead.

Sure, we know that the news is bad. We all have TV sets and watch the same things. The economic uncertainty surrounding our economic futures remain cloudy, and investor confidence has been shaken.

The good news however is lined in things the average investor doesn't see on TV. We are seeing classical technical signs that a bottom in the stock market is close, and may have even occurred in October;

extreme bearishness
intense record volume
historic volatility
extreme oversold conditions

After the beating the stock market has taken this fall, it will take the S&P several weeks and months of basing to confirm that a final bottom is in. A little good news would hurt either.

Going back to October 2002 and March 2003, the bottom on the S&P was around 770.70-776.80. The index currently stands at 859.12. A drop back down to those lows would signal a 100% retracement.

Now that the credit markets are beginning to thaw, business are gaining important access to essential short-term financing for the all important holiday season.

Now that no one believes that they economy will improve, and hold the opinion that things will only get worse, the majority of the damage in the market has probably been done. Its clear that the stock market wants new leadership. With a new president on the horizon, hope for the future is building. Along with this new hope will come optimism, and optimism is exactly what we need.

Here's what I think will happen;

-The big 3 automakers will be extended a loan from the US government (similar to the one Chrysler received in the 1970's)

- The government will put together a package to support delinquent homeowners.

- The market to market accounting rules will be repealed.

- The government will implement a massive tax stimulus program as well as lowering taxes for the middle class.

-The SEC will reinstate the uptick rule for short sellers.

- The government will implement a massive massive fiscal stimulus package that will be used to build and repair roads, bridges, and other infrastructure projects.

The Federal Reserve will lower key short term interest rates to .50 or 1/2%.

In anticipation of the above, I feel the stock market will begin to dig itself out of its deep hole. An initial rally off the bottom will be strong, violent, and breathtaking. After this rally, I would expect a sharp decline, but following a pattern of higher highs, and higher lows.

After a 9-12 months, the stock market will begin to sustain rallies as economic times continue to improve.

By the end President Obama's first term, the Dow and S&P will be at or approaching new highs.

From 2005 to 2007, I went against the grain and held a very pessimistic view. I am going against the grain again in 2008, I am now an optimist.

JOKE: A definition of a optimist is;

Someone who jumps off a 90 story building, and as he passes the 60th floor he yells- "so far, so good!"

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

I have heard stories over the years of how Warren Buffett got rich. His real wealth excellerated after the recession of the early 70's. In my investing lifetime, I have waited for the same opportunity. Well, here we are.

As hotshot hedge fund managers continue to get creamed, forced selling is drving the markets down to levels no seen in many years. If you don't need money from your investments to live on, now is a great time to be an investor.

No one believes the economy or the stock market will turnaround anytime soon. In fact, I heard predictions of improvement no coming until 2010-2012.

Today, the buyers strike continued as rumors surfaced that the "Little 3" automakers in Detroit were doomed. In addition, a release of the CPI numbers worried some that the US could be facing a deflationary environment since the index dropped 1%.

I wish these idiots would make up their minds, first they were alarmed about massive inflation, and now that energy prices have dropped, they are fearing deflation.

One thing I have learned over the years, it is always something- positive and negative. The over emphasis on the extremes is to get you to buy more at the top, and sell everything at the bottom. Where are the Chinese firing squads when we need them?

October housing starts came in at its lowest point since 1960. While that is bad for builders, it is actually good for the housing market. The last thing the housing sector needs is additional inventory while existing structures are being sold. Working off inventory is much more important than new starts.

Investors are counting the days before the new administration takes office. I think you'll see a very engaged administration right off the bat. Unfortunately for Mr. Bush and his legacy, his advisers are a bunch of idiots, and Sarah Palin tried to tell us this in not so many words.

I took a couple of days off from blogging last week. I was tied up with client accounts- adding to equities, and taking advantage of some better yields in tax free bonds. This being said, I think we are beginning to see a fairly clear pattern in the equity markets. If anyone within the Bush Administration makes a comment, the markets sell off. When the incoming Obama team makes an announcement, the market rallies. I think you'll see this pattern continue as confidence is restored.

Keep in mind I don't blame President Bush (like others). I think his entire cabinet should have been fired along with the Vice President. I realize this is tough to do, but numerous failed policy decisions have haunted this administration.

On Friday, the equity markets went nuts (rallied) when Federal Reserve Bank of New York chief Tim Geithner was rumored to be the next Treasury Secretary. Apparently investors believe this is the right choice. At this point investors could care less who is appointed as long as the values of their stock portfolios gain in value.

The roughly 500 point rally on Friday was helped by a deeply oversold market, and this investors woke up to news that Citigroup was not going to fail.

In the weeks and months ahead, I think we'll see a gradual mending of the stock market and the economy. With the S&P 500 down over 45% for 2008, a giant stimulus program by the Obama administration will go a long way toward restoring confidence in the markets.

What I have found impressive over the past few weeks is the massive buying by corporate insiders. Normally I will see 1-2 pages of insider buys to go along with 1-2 of sells. Now I am seeing 7-9 pages of buys, and 1 page of insider sells. Obviously insiders are seeing tremendous opportunities.

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

While the DJIA, S&P 500, and NASDAQ are at these extremely low levels, I want to take advantage of the declines in these indexes in preparation for a market rebound in 2009 and beyond.

NEW SELLS:

FXF: Currency Shares Swiss Franc Trust

NEW BUYS:

VTI: Vanguard Total Stock Market ETF

Top Holdings:

AAPL, T, CVX, COP, XOM, GE, IBM, JNJ, MSFT, PG
Dividend Yield 3.36%

Despite the weakness in all sectors across the board, bonds, banks, biotech, and energy still rank among the top 25 in the ETF universe.

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) VTI: Vanguard Total Stock Market ETF
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

Here are our Top 10 Fidelity Sector Funds for November 2008

NEW BUYS:

FBIOX: Biotechnology

NEW SELLS:

FSMEX: Medical Equipment

1) FSCHX: Chemicals
2) FBIOX: Biotechnology
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

The mood of investors is changing. Sure, there will be more challenging days ahead, but the path that the markets take over the next few years will- in my opinion- be a much more favorable one for investors. Hold on, the Calvary is coming!

Its been a tough ride, and the solutions are taking a little longer than I had anticipated, but in January the Calvary will finally arrived, and their charge will be swift and decisive.

After yesterday's 396 point rally, stocks put on their biggest two day rally since 1987. The markets got a boost after the US government announced a $326 billion bailout plan of Citigroup.
The mood on Wall Street changed even more when President-elect Obama announced his economic team, and congressional leaders said an economic stimulus plan would be presented on his first day in office.

Yesterday, the DJIA was up as much as 552 points before a late day sell off drove the index into close with 396 point gain. These quick sell offs on the close are hedge funds shorting or redemption's, as well as mutual fund activity. Margin calls are killing the hedge funds and providing us with an opportunity to buy stocks on the cheap.

According to Bloomberg, S&P 500 companies are now trading at their cheapest prices in 20 years when compared to their historical earnings potential.

The markets rallied right out of the box this morning, and then Treasury Secretary Hank Paulson showed up at 10 am est. PE Obama showed up shortly after Paulsen, so we'll see by the end of the day how the markets react.

Keep in mind the stock exchanges will be closed on Thursday for Thanksgiving, and close at 1 p.m. ET on Friday in an abbreviated session.

My advice is to go enjoy the holiday, and get a jump on your Christmas shopping.

The Rest of the Story

The irritable mood on Wall Street and Main Street is changing. Thanks to President elect Obama, investors and consumers are gaining confidence. Some have questioned Obama's frequent appearances in recent days, saying that he is acting as President and he hasn't even been sworn in yet. To these people I say, "Thank god someone is trying to lead because we have been leaderless up until now."

My comments are not partisan. My comments are based on the fact that I cannot stand incompetence, and a lack of accountability during times such as these. Someone or something somewhere got us into this financial mess. Now someone somewhere is going to get us out. Along the way I hope that heads roll, people are thrown in jail, and the Wall Street investment banks that created this mess are never allowed to exist in any way shape or form in the future.

It's time to kick ass and take names.

The first place I would start kicking would be the investment banks. I would raid the corporate offices with the FBI and SEC. I would sue CEO's, executives, and traders to reclaim the massive bonuses they received over the past eight years. I would take them out of their offices in handcuffs, and parade them in front of the entire world.

The second place I would visit would be the headquarters and trading offices of head funds. Head funds are made up primarily of former Wall Street investment types who have over leveraged themselves to create turmoil in the financial markets. I would look for illegal short selling activity, and if found, I would close their operations immediately.

These two groups of manipulators have done the bulk of the damage to the equity markets. Some are obviously honest and legitimate, but the rest are no better than the criminals that run organized crime. In many cases they have been above the law because the laws put in place to regulate you and I, and do not apply to them.