Archive for June, 2008

VIX Not Yet Peaked

Friday, June 27th, 2008

The VIX chart above (courtesy of Doug Kass) shows the relationship between the volatility index and the DJIA.

You can see that in earlier selloffs the VIX peaked substantially higher than it did yesterday. That will give the short-term traders more reason to sell as they will be expecting more downside to this market.

It is hard to tell what the day will bring, but the market opens in a bit and the futures are indicating a slightly down opening. Oil is up again, which will put a downward bias on the market as well.

Not really the way we wanted the quarter to end, but the good news is that all of the gold stocks that we’ve been buying were up 6% to 8% yesterday, so our thesis that gold as an inflation hedge and as a hedge against calamity in the financial markets seems to have been a good one.

More later.

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Yield on 10 Year Treasury

Tuesday, June 24th, 2008

The yield on the 10 year treasury bond has been trending up since March.

We appear to have bounced off a resistance line, but the likely move will be for the yield to move through the resistance and head higher.

The inflation news on the CPI and PPI being at multi-year highs virtually guarantees that the bond market will continue to sell off and yields on bonds will continue to move higher. If you own any bond mutual funds, you will likely see your total return be negative as you lose more in principal value than you will gain in interest, unless they are extremely short duration funds.

The good news with this is that since the bond market is falling and yields are increasing, the Fed feels less pressure to raise short-term Fed Fund rates, so they may stay on hold for longer than people anticipate. This will give the troubled banks some additional breathing room to work on their balance sheets by borrowing at cheaper rates.

The rest of the bad news is that a falling bond market is not good for the stock market, in general.

Be careful with your personal risk management strategies in the managing of your investments – be more concerned with the return OF your capital and not the return ON your capital.

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Bank Stock Index Approaches Long Term Support

Monday, June 23rd, 2008

If you look at the chart above (courtesy of Alan Farley), you will see that the BKX bank stock index is heading to a long term support level that goes back to 1998. If this level can hold, then we are likely at a point where you can safely start to selectively buy the financial stocks that are the equivalent of the baby being thrown out with the bath water.

There are some good financials that have gone down simply because the entire industry has sold off, and you likely should be able to buy these and make a profit from them. That said, there will be many others that will continue to devalue based upon balance sheet problems.

Selectively, companies with strong franchises that do not have exposure to subprime mortgages and that are protected from a slowing in the commercial real estate market (by good lending standards, diversification, etc.) should provide long-term value at today’s prices. Historically, when there has been a banking crisis, and you have been able to buy qualtiy companies at 70% to 90% of tangible book value, and make significant returns.

We will be watching this closely to see if the support levels hold. If they do, we will be choosing some key players to buy as the index returns to higher levels.

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Newsletter Follow-Up, Part 3

Monday, June 23rd, 2008

One of the sections of the newsletter discusses geopolitical risk, particularly with regard to the Israel / Iran situation. Below is an article from the NY Times that reports on an Israeli training exercise that dovetails with what I wrote. Below it is an article that describes Iran’s response.

Geopolitical events have added a risk premium to the price of oil that we will likely see continue permanently or until there is peace in the Middle East.

June 20, 2008

U.S. Says Israeli Exercise Seemed Directed at Iran

WASHINGTON — Israel carried out a major military exercise earlier this month that American officials say appeared to be a rehearsal for a potential bombing attack on Iran’s nuclear facilities.

Several American officials said the Israeli exercise appeared to be an effort to develop the military’s capacity to carry out long-range strikes and to demonstrate the seriousness with which Israel views Iran’s nuclear program.

More than 100 Israeli F-16 and F-15 fighters participated in the maneuvers, which were carried out over the eastern Mediterranean and over Greece during the first week of June, American officials said.

The exercise also included Israeli helicopters that could be used to rescue downed pilots. The helicopters and refueling tankers flew more than 900 miles, which is about the same distance between Israel and Iran’s uranium enrichment plant at Natanz, American officials said.

Israeli officials declined to discuss the details of the exercise. A spokesman for the Israeli military would say only that the country’s air force “regularly trains for various missions in order to confront and meet the challenges posed by the threats facing Israel.”

But the scope of the Israeli exercise virtually guaranteed that it would be noticed by American and other foreign intelligence agencies. A senior Pentagon official who has been briefed on the exercise, and who spoke on condition of anonymity because of the political delicacy of the matter, said the exercise appeared to serve multiple purposes.

One Israeli goal, the Pentagon official said, was to practice flight tactics, aerial refueling and all other details of a possible strike against Iran’s nuclear installations and its long-range conventional missiles.

A second, the official said, was to send a clear message to the United States and other countries that Israel was prepared to act militarily if diplomatic efforts to stop Iran from producing bomb-grade uranium continued to falter.

“They wanted us to know, they wanted the Europeans to know, and they wanted the Iranians to know,” the Pentagon official said. “There’s a lot of signaling going on at different levels.”

Several American officials said they did not believe that the Israeli government had concluded that it must attack Iran and did not think that such a strike was imminent.

Shaul Mofaz, a former Israeli defense minister who is now a deputy prime minister, warned in a recent interview with the Israeli newspaper Yediot Aharonot that Israel might have no choice but to attack. “If Iran continues with its program for developing nuclear weapons, we will attack,” Mr. Mofaz said in the interview published on June 6, the day after the unpublicized exercise ended. “Attacking Iran, in order to stop its nuclear plans, will be unavoidable.”

But Mr. Mofaz was criticized by other Israeli politicians as seeking to enhance his own standing as questions mount about whether the embattled Israeli prime minister, Ehud Olmert, can hang on to power.

Israeli officials have told their American counterparts that Mr. Mofaz’s statement does not represent official policy. But American officials were also told that Israel had prepared plans for striking nuclear targets in Iran and could carry them out if needed.

Iran has shown signs that it is taking the Israeli warnings seriously, by beefing up its air defenses in recent weeks, including increasing air patrols. In one instance, Iran scrambled F-4 jets to double-check an Iraqi civilian flight from Baghdad to Tehran.

“They are clearly nervous about this and have their air defense on guard,” a Bush administration official said of the Iranians.

Any Israeli attack against Iran’s nuclear facilities would confront a number of challenges. Many American experts say they believe that such an attack could delay but not eliminate Iran’s nuclear program. Much of the program’s infrastructure is buried under earth and concrete and installed in long tunnels or hallways, making precise targeting difficult. There is also concern that not all of the facilities have been detected. To inflict maximum damage, multiple attacks might be necessary, which many analysts say is beyond Israel’s ability at this time.

But waiting also entails risks for the Israelis. Israeli officials have repeatedly expressed fears that Iran will soon master the technology it needs to produce substantial quantities of highly enriched uranium for nuclear weapons.

Iran is also taking steps to better defend its nuclear facilities. Two sets of advance Russian-made radar systems were recently delivered to Iran. The radar will enhance Iran’s ability to detect planes flying at low altitude.

Mike McConnell, the director of national intelligence, said in February that Iran was close to acquiring Russian-produced SA-20 surface-to-air missiles. American military officials said that the deployment of such systems would hamper Israel’s attack planning, putting pressure on Israel to act before the missiles are fielded.

For both the United States and Israel, Iran’s nuclear program has been a persistent worry. A National Intelligence Estimate that was issued in December by American intelligence agencies asserted that Iran had suspended work on weapons design in late 2003. The report stated that it was unclear if that work had resumed. It also noted that Iran’s work on uranium enrichment and on missiles, two steps that Iran would need to take to field a nuclear weapon, had continued.

In late May, the International Atomic Energy Agency reported that Iran’s suspected work on nuclear matters was a “matter of serious concern” and that the Iranians owed the agency “substantial explanations.”

Over the past three decades, Israel has carried out two unilateral attacks against suspected nuclear sites in the M
iddle East. In 1981, Israeli jets conducted a raid against Iraq’s nuclear plant at Osirak after concluding that it was part of Saddam Hussein’s program to develop nuclear weapons. In September, Israeli aircraft bombed a structure in Syria that American officials said housed a nuclear reactor built with the aid of North Korea.

The United States protested the Israeli strike against Iraq in 1981, but its comments in recent months have amounted to an implicit endorsement of the Israeli strike in Syria.

Pentagon officials said that Israel’s air forces usually conducted a major early summer training exercise, often flying over the Mediterranean or training ranges in Turkey where they practice bombing runs and aerial refueling. But the exercise this month involved a larger number of aircraft than had been previously observed, and included a lengthy combat rescue mission.

Much of the planning appears to reflect a commitment by Israel’s military leaders to ensure that its armed forces are adequately equipped and trained, an imperative driven home by the difficulties the Israeli military encountered in its Lebanon operation against Hezbollah.

“They rehearse it, rehearse it and rehearse it, so if they actually have to do it, they’re ready,” the Pentagon official said. “They’re not taking any options off the table.”

Ethan Bronner contributed reporting from Jerusalem.

June 23, 2008

Iran Says Israel Not Capable Of Threatening It

Filed at 5:12 a.m. ET

TEHRAN (Reuters) – Iran said on Monday Israel could not threaten it, a few days after a U.S. newspaper reported that Israel’s air force had apparently rehearsed a potential bombing raid of Iran’s nuclear facilities.

Iran and Israel have engaged in a sharp exchange of words this month over suspicions Tehran is looking to develop nuclear weapons, helping to push global oil prices higher.

“They do not have the capacity to threaten the Islamic Republic of Iran,” Iranian Foreign Ministry spokesman Mohammad Ali Hosseini told a news conference.

He was asked about a New York Times report on Friday that quoted U.S. officials as saying Israeli jets conducted a long-range Mediterranean exercise this month that appeared to be a practice for a mission against Iran.

“They (Israel) have a number of domestic crises and they want to extrapolate it to cover others. Sometimes they come up with these empty slogans,” Hosseini said in comments translated by Iran’s English-language Press TV satellite station.

Iran’s defense minister on Sunday accused Israel of “psychological warfare,” but said Tehran would give a “devastating” response to any attack.

On Friday, the U.N. nuclear watchdog chief, Mohamed ElBaradei, said a military strike on Iran would turn the Middle East into a fireball and prompt Tehran to launch a crash course to build nuclear weapons.

EU SANCTIONS

Western powers suspect Tehran is seeking to develop nuclear bombs and European Union president Slovenia said the 27-nation bloc was scheduled to agree a new round of sanctions against Iran on Monday over its refusal to stop uranium enrichment.

Israel, widely believed to have the Middle East’s only atomic arsenal, has described Iran’s nuclear program as a threat to its existence.

Earlier this month, Israeli Transport Minister Shaul Mofaz told an Israeli newspaper an attack on Iran looked “unavoidable” given the apparent failure of United Nations sanctions to deny Tehran technology with bomb-making potential.

Tehran, which does not recognize Israel and regularly predicts its demise, says its nuclear work is a peaceful drive to generate electricity.

Israel bombed an Iraqi reactor in 1981 and an Israeli air raid on Syria last September razed what the United States said was a nascent nuclear reactor built with North Korean help. Syria denied having any such facility.

But many analysts say Iran’s nuclear sites are too numerous, distant and fortified for Israel to take on alone.

Iran has threatened to retaliate if it is attacked. Its Shahab-3 missile, with a range of 2,000 km (1,250 miles), is capable of hitting Israel and U.S. bases in the Gulf, Iranian officials say.

(Writing by Fredrik Dahl; Editing by Dominic Evans)

Newsletter Follow-Up, Part 2

Monday, June 23rd, 2008

Below is an article by Vince Farrell that discusses the impact on oil stock prices if oil itself falls in price. I thought you might want to read it in light of the issues discussed in the newsletter that I mailed last week.

Even if Oil Falls, Oil Stocks Are Safe
By Vincent Farrell Jr.
6/23/2008 7:30 AM EDT

Over the course of the 150 years that oil has been drilled, the price has gone up seven years in a row, according to The New York Times. This weekend’s decision by the Saudis to modestly raise production for the rest of this year and to eventually increase production targets from 12.5 million barrels per day (BPD) to 15 BPD may or may not be enough to stem the current price rise. If oil were to be released from the Strategic Petroleum Reserve, the odds of breaking the back of the price spiral would be greater.

Barron’s ran an article this weekend that predicts that oil will pull back toward $100. Since there are signs of economic slowdown in the U.S., Western Europe, Japan and Australia — which account for 57% of global oil demand — a fall in price is inevitable. However, since China uses only two barrels of oil per person per year, and India only one barrel per person, a renewed climb in the price of oil is in the cards (the U.S. uses 25 barrels per person per year, and Japan 14 barrels.)

If the commodity were to fall in price, what is the worth of oil equities? Merrill Lynch (MER) is using an estimate of $100 a barrel for 2010. If that were the case, and making some guesstimates on the profitability of refining and chemical operations, ExxonMobil (XOM) would earn $10.60 per share and Chevron (CVX) would post an EPS of $13.70.

Using Friday’s closing price, XOM would trade for just 8 times earnings while Chevron would trade for just 7 times earnings. I have no doubt that these stocks (both of which I own) will go down if the price of crude falls fast and hard. But since they didn’t surge this year while oil rose 40% (XOM is off a touch, and CVX is up a few percent), I question how much they would decline. And those single-digit price P/E multiples make me want to stay the course.

Newsletter Follow-Up, Part 1

Monday, June 23rd, 2008

On Friday, we mailed my most recent newsletter which focused on oil. If you are on our mailing list, you should be receiving it shortly. If you are not, and want to receive it, please email me ( ballard@bankchampaign.com ) and I’ll add you to the mailing list.

Below is an article by Jim Cramer who many of you may watch on CNBC. It focuses on oil and touches on some of the same issues that I wrote about in the newsletter.

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Supply, Not Speculators
By Jim Cramer
6/23/2008 10:57 AM EDT

Speculators may actually be a part of the problem with oil, as may be the index players of commodities.

But before we assess their role, let’s accept something: there is nothing wrong with commodities being indexed, as we want institutions to make money and speculators are actually investors when oil is this high. In other words, the best investment is in oil, and has been in oil, so we should go after those non-users who got into it? Since when have we cared what people do with a commodity? Not since the cornering of silver by the Hunt family have we focused on this. And this is not a cornering. Today the futures were down earlier in part I believe because some feel there is at last a lot of inventory. I don’t see if, but if it is true, then the speculators should be selling, freeing up more oil. (A strong dollar will also be cited.) Then the indexers should get clobbered.

But I don’t think any of this will happen, and the price will not stay down. For me the next stop is $150, and the speculators/indexers win.

As performance people, shouldn’t we just wonder how right the speculators and indices have been rather than blame them for inflating their own performance? It is simply a great decision to invest in a commodity that is being driven up by worldwide demand.

Theoretically, if there is a speculative bubble, someone should have sated it by now, just like the dot-coms were sated by too many offerings, the ethanol plays were sated by too many offerings and the and the housing bubble was sated by too many houses being built.

Where is the satiation here? Nowhere. Instead of blaming the buyers, we should admit that the sellers can’t meet demand at these prices and stop railing. If speculators are driving things up, then Exxon (XOM) and Shell (RDS.A) and Conoco (COP) should be able to go after shut-in capacity and hit that bid and all the other bids all the way down. Nigeria, Mexico, Venezuela and all of the other places that are supposed to be awash with oil should be able to sell out their production out six to nine months — not the near term, that’s unrealistic — as they ramp up that production. They can’t, because at these levels they still can’t produce more. It is quit obvious that the Saudis are dissembling because they have never wanted the price to soar. It will now make the more inventive of us find other sources of power.

It hasn’t happened yet.

People don’t understand the dynamics of a futures market if they blame the buyers.

Do people think the buyers can just take the stuff off the market inevitably and therefore permanently wreck pricing?

Why aren’t we blaming Exxon for not pumping full-tilt? To me, the answer is obvious: they are.

Why aren’t we blaming the members of OPEC for not pumping full tilt? The answer is obvious: they are.

Do we believe the speculators have removed from the market 4 or 5 million barrels a day? Is that what we think? 2 million barrels? 1 million barrels? A half million? Where the heck is it? In secret underground storage facilities?

Sure, someone caught short has been hurting .But every squeeze in the end is met by supply. This wasn’t hasn’t been because the prices are still too low versus the real demand from the countries that need oil.

It is pathetic that the focus is on the speculators. But that’s the way we see it, and that’s what’s going on, and it solves nothing at all. Frankly typical if you ask me.

I have been saying over and over again that there’s food inflation and oil inflation. To some degree (weather permitting), we control the former. How can we not let our grains float free of wrong-headed subsidies? Money. Political money. Small amounts of political money and the need to win Iowa are the reason 30% of the corn crop went to 3% of the gasoline.

Goldman Sachs Shifts Investment Strategy

Monday, June 23rd, 2008

Goldman Sachs published their Investment Strategy today and there is a shift away from Financials and Consumer stocks to Energy, Materials, and Information Technology.

Their view now coincides fairly closely with our view with the exception of the Information Technology sector. We have started to review the fundamentals of Info Tech and there are a number of the large multinationals whose earnings are derived outside the US. That fits into our strategy of investing in domestic companies with > 65% of their earnings coming from foreign sales.

Here is what they have to say:

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Four macroeconomic themes will drive the overall market and relative sector returns during the next several months: (1) inflation, 2) consumer weakness, (3) global growth, and (4) fiscal stimulus.

Energy, Materials, and Information Technology sectors will likely outperform in such an environment while Financials and Consumer Discretionary will lag. Growth projections and valuation metrics support this view as well (see Exhibit 1).

We are reversing some of the sector weighting changes we made in early May when we argued for a tactical upward trend in the market and moved to an overweight position in the Consumer and a neutral weight in the Financials. Obviously, that forecast hasn’t turned out too well in hindsight, particularly in the case of Financials which has posted another awful month of performance. The sector is down 23% YTD.

Our new weightings bring us back to an underweight position in Financials and Consumer Discretionary. We recommend overweight positions in Energy, Materials and Information Technology. We are Neutral for other sectors (defined by us as within 100 basis points of the benchmark S&P 500 sector weights).

Inflation. Commodities prices continue to set new record highs almost on a daily basis. An intense debate has erupted among market participants as to whether we are experiencing a commodities boom or bubble. Goldman Sachs commodities research argues the jump in raw materials prices is fundamentally-driven given the inability of producers to bring on new supply to meet the increased demand. Goldman Sachs commodities research forecasts average 2008 prices for a variety of energy, industrial metals, and agricultural raw materials will be 50% above the 2007 average. Last week, we analyzed sector performance during periods of accelerating PPI “crude materials” inflation. Prior periods of rising PPI “crude materials” inflation coincided with falling operating margins, P/E multiple contraction, and low equity returns. We found that Energy and Materials posted high returns while Telecom Services and Financials performed the worst (see US Equity Views: Inflation dampens margins, multiples & returns, June 16, 2008).

Consumer weakness. Firms now routinely acknowledge weakening end-market demand and “trading down” by consumers. In addition to surging energy and food prices, credit availability remains tight. Mortgage and credit card delinquencies are rising. Unemployment recently jumped to 5.5%. These trends will negatively affect consumer-driven sectors.

Fiscal stimulus. Although the fiscal stimulus has prompted spending in the near term, the longer-term prospects for the consumer remain poor. Consumer Staples should perform better than Consumer Discretionary as consumers cut down on compulsory items in favor of necessities. What sustains consumer spending after the tax rebate checks have been spent?

Global growth. Global economic activity is slowing, but firms with high non-US sales are more better positioned relative to domestically-oriented companies. A weak dollar should also drive sales outside the US. Sectors with above-average foreign sales include Information Technology (55%), Energy (45%), and Materials (41%). Non-US sales are 29% of S&P 500 total.

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Earnings are not falling across the entire market. We believe consensus EPS estimates are far too optimistic in aggregate, but we do not see negative revision potential for most Energy and Materials companies. Year-to-date, analysts have actually revised Energy estimates upward by 13%. Materials estimates have risen slightly (0.6%) compared with estimates for the entire market S&P 500 which are down 12% this year.

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In early May, we changed our recommended sector weights to reflect our view that the S&P 500 would trade higher during the summer. We believed a combination of fiscal stimulus, the availability of new funds to recapitalize the balance sheets of major financial institutions, and a general lack of negative earnings news would provide optimism and push the market gradually higher (see US Equity Views: Tactically long: Adjusting sector weights for near-term SPX rise, May 5, 2008).

Accordingly, we shifted our sector allocation in a more cyclical direction, boosting Consumer Discretionary to an overweight and Financials to a market weight from longstanding underweights. However, we believed any recovery would be a short-lived “false dawn.” Our longer-term view was that falling home prices, together with margin pressures from higher commodity prices, would mean weak second-half 2008 earnings and an uncertain 2009 outlook. We expected the market would trade higher over the summer but eventually the S&P 500 would track towards a year-end fair value in the range of 1390-1480.

Clearly, the events described above did not take place as we anticipated. Instead of witnessing a summer rise we have experienced a 6% correction. We did not anticipate the dramatic jump in the US unemployment rate to 5.5% and the worldwide preoccupation with accelerating inflation. The 2Q earnings season begins in four weeks but we no longer expect a short-term bounce in the market.

Going forward, we believe that the market will stay within the same range that it has been trading in since the beginning of the year although the increased volatility in the market provides for the possibility of large swings within the range. We maintain our 2008 year-end target of 1380.

Our sector recommendations have generated a negative excess return of 67 bp since the start of 2008. Our performance since early May was aided by our continued overweight in Energy.

A Must Read Analysis from Doug Kass

Monday, June 23rd, 2008

Doug Kass published the following article today. It sums up the current state of our economy and the investment markets much better than the RBS economic crash analysis from last week.

We continue to monitor our stop loss orders, and if we get a short-term bounce in the stock market that Doug forecasts, we will raise them accordingly to protect those gains.

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The Loss of (Investment) Innocence
6/23/2008 7:39 AM EDT

We now face the aftermath of a bygone credit cycle gone ballistic.


“I used to be Snow White — but I drifted.”

— Mae West

It’s innocence when it charms us, ignorance when it doesn’t.

For over two decades, with the possible exception of the aftermath of the speculative bubble of the late 1990s, equity investors have been comforted by the notion that nearly every dip has been a buying opportunity as the U.S. economy has typically recovered relatively swiftly from economic and credit, geopolitical, systemic and assorted exogenous shocks. And for over two decades, fixed-income investors have been comforted by the tailwind of disinflationary influences, which provided excellent absolute and relative returns in bonds.

Stated simply — similar to Edith Wharton’s brilliant The Age of Innocence, when “being was better than doing” — stocks and bonds were no-brainers to most. After all, investors’ intermediate- to longer-term experiences in the capital markets were universally solid.

The media insisted that investors buy stocks and bonds for the long run as the sky was the limit. Even James Glassman and Kevin Hassett’s Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market seemed within reach.

“Here’s another fine mess you have gotten me into.”

— Ollie (Laurel and Hardy)

As we entered the New Millennium, the U.S.’s economic moorings became unanchored as unprecedented low levels of interest rates produced a second wave of speculation in housing and daytrading in homes replaced the daytrading in stocks. The generous availability of low-cost capital and debt formed the foundation of an unprecedented boom in consumer borrowing, a massive spending binge and a desperate institutional search for yields.

A shadow banking industry emerged as the helter skelter move into derivative products (which were unregulated, unwieldy and intentionally seemed to circumvent banking capital requirements) rapidly materialized. And an eager hedge fund community joined the happy hour of leveraging while unquestioning investors seemed to sanction the generation of common returns that were produced by taking uncommon risks.

At the epicenter of the leverage was the housing market, which was confidently embraced by owner non-occupied investors, who stretched housing prices and affordability (home prices divided by household incomes) to unsustainable levels. Expectations of a long, uninterrupted boom in residential real estate became the newest paradigm.

Generally speaking, the availability of cheap credit made the notion of debt more acceptable and institutionalized leverage, serving to enrich a small cabal of originators who sliced and diced housing mortgage products. With the benefit of hindsight, however, it is clear that the mass marketing of debt began to poison the world’s financial system.

“All for one! One for all! Every man for himself!”

The Three Stooges, “Restless Knights” (1935)

That was then and this is now.

Last week, we saw a tsunami of selling, which was in marked contrast to my expectations for some stability.

We now face the aftermath of a bygone credit cycle gone ballistic. The world’s financial system is, to some important degree, crippled and in a workout mode now. In all likelihood, the pendulum of credit will swing to an opposite extreme, and availability (the lifeblood of economic growth) will become dear, which is in marked contrast to the freewheeling decade of the past.

Regardless of short-term direction, we continue to be in an investing environment that argues in favor of erring on the side of conservatism. Most should maintain smaller-than-typical investing/trading positions and should keep conviction on the back burner.

The experience of the last 12 months has exacted a toll on investors. Household net worths have taken a hit from the depreciation in stock and home values, confidence in our politicians and corporations (especially of a financial kind) have rarely been lower, and, importantly, investors’ innocence has been lost.

While, at some point (maybe sooner than later), the equity markets will rally from the current oversold readings, an extended period of investor disinterest and apathy seems likely to follow.