Food Inflation; Our Inner Magpie; Feed the Pig.

File this under projects that I wished I had started two years ago. . . I wish that I had created a shopping list of basic staples: coffee, sugar, milk, butter, bacon, eggs, flour, cereal, chicken, turkey, beef and pork. (I'm purposely leaving out vegetables.) On this list, I would unitize the staple (per pound, per dozen, per gallon), and chronicle the cost change quarterly. Oh well.

If I were to put my futurist hat on (its made of tin foil!), I would say that food inflation has the potential to be one of the most serious, global social/economic issues that we will likely face in the future.



From the BLS, you can create this chart--or any chart on specific prices--by following the BLS link in the sidebar. You can see this how this chart is produced here:

If I'm reading the above chart correctly, farm product prices have increased 39+% since Jan of 2006. Of course, you know that, because your food bill has gone up.

Grain price increases are far reaching as you know: beer, cereal, flour, tortillas, livestock feed. Further, these grains are the nutritional base for foreign hunger programs. While so much of Wall Street is enamored with the notion of more middle class consumers (for goods), these middle class consumers need to consume food. A marvelous poetic justice (a nice retribution for the avarice that William B notes in the comments section of the previous post) for our business tycoons will be our newly minted consumers dealing with extraordinary food inflation taking away precious dollars for trinkets.

I think that the most significant thing that I'll see in the final third of my life is our country's declining political and economic hegemony. I've mentioned it here before. I grew up when America's might and right was unparalleled.

We talk much in this country about our love of freedom. (Warning: I'm working up to a point) Mark and I have been watching the HBO series, "John Adams". I read McCullough's excellent biography. I read Adams' and Franklin's biographies back to back, with full expectations that I would enjoy the Franklin biography better. That was not to be. I was captivated by Adams. I also remember vividly the crappy politics that were played--another reminder that nothing ever changes.

The production (which I can proudly say was filmed in our beautiful Virginia, capitalizing on the Williamsburg) with its wonderful actors (Paul Giamatti and Laura Linney) reminds me of the incredible weight of the deliberations to assert independence--and the extraordinary uncertainty of the outcome. It does give me comfort to know that whatever befalls humanity, we have an amazing capacity to dig deep and find what is best in us.

My point. I'm developing this gradual awareness that we've jeopardized our country's economic freedoms (hard deliberated, hard fought and hard won by our independence patriots) through our constant strivings to sate our desire for bigger, newer, shinier, pricier. . . . We've done that through borrowing--not through true wealth creation--at least not on behalf of the consumers. NG notes the media as playing a role in shaping our views. I'd amplify 'media' to include the barrage of advertisements. The media assaults us daily to shape our role as consumers and creating these 'ideals' of how we should look, dress, live, eat and leisure. Nothing is more efficient than advertising in finding your and my inner magpie and seducing it with the lure of shiny objects.

I'm sure that you've seen the "Feed the Pig" campaign.

I just researched it and was happy to learn that it is sponsored by the AICPA. We've squandered so much of our wealth in our consumption beyond our means. Our current crisis is a credit crisis. We have debt without adequate underlying asset values or means to repay. Rather than having net assets (assets greater than liabilities) we have net debt. You know that equation. Somehow that hole gets filled--and the filling of it generally means lost jobs and loss of owner/shareholder value.

My point is not to be dark and pessimistic, but at some point in time we have to realize that we need to ignore our inner magpie and feed the pig. It is a sea change, and such a change in behavior will (1) take time to take hold--unless it is forced through a shock which may well be the case; and (2) will have long lasting ramifications for industry, both ours and the worlds.

The Bernstein article touched on that a bit. I hope that you take time to read it.

Ecuador

My neighbor, who Valvoline_6 knows, is traveling tomorrow to Ecuador, where his son, R, is doing an internship. As you know, I like to provide pictures, and I'm the grateful recipient of the link where some of R's travel photos are posted. I'll post some of these along with my blogs this week. Here's the first.

PM Post

John Mauldin has sent out his "Outside the Box" missive. It features Peter Bernstein's letter (PB of Against the Gods) which talks about the current state of things. I want to tease you with two paragraphs--they are his closing paragraphs, but I don't think that this is a spoiler!

The central message of our analysis is not that the origin of today's difficulties is uniquely in the household sector or that the residue of these difficulties has scrambled the whole credit structure in the financial markets. Everybody knows about these troubles.

On the other hand, too few observes have noted how the consequences of these developments are going to require an extended period of time before the blockages they impose have been eliminated. But that is not all they have missed. This extended period of difficulty is going to bring about a new economic régime, different in many aspects from the experience of most people alive today. Along the way, we will have to pass through a transition period that harks back to an unfamiliar past in both the financial system and in the household sector.

I found these comments so spot on, and have ruminated about the same here in this space. Not as cogently as Bernstein, most assuredly. The dynamic tension is one that from bad springs better--and it comes upon you without your realizing it.

Market Close

Sector performance (from DJ). Note that the indices that capture this information also capture all preferred shares as well.


Market data from WSJ. Click on image to go the the WSJ market data page--one of the singular BEST places to get consolidated market information.

A Blog as One's Backyard

I did not want to relegate this sentiment to the 'comments' section.

I began this blog in 10.01.06. It was my attempt to sort of publicly hash out my private machinations of becoming a more savvy investor. I wrote for more than 6 mos before I linked my blog to my name in any of the public areas that I posted. My dear Anon--I'm not a financial services executive, but rather a Executive Financial (CFO) person. So, I bring no depth of experience as you have to investing and markets.

For the most part, there were only three places that I posted: Barry Ritholtz's, Bill Cara's and Roger Nusbaum's blog. I consider thoughtful, honest communication important--both in person and most particularly on-line. I've tried to model that value in my posts both here and in those places. I'd be lying if I said that I don't get pi$$y from time to time, but I've never written a regrettable post. I have Bill Cara to thank for two things:

• Thing One:for his introducing me to 'his way' of investing--which for average investors like myself is both approachable and executable. It is his passion.
  

• Thing Two: In his being supportive of my own blogging efforts. It meant so much to me. It still does.

While a blog is a public place, it is also a place where the host sets the parameters. It is his or her right to do so. I've only deleted a couple of comments in my blog--I think that they were spam--hawking products under an alias. My comments section is generally a quiet place, so I've not had to set any real parameters. And when there are comments that make me uncomfortable (I was called a recessionista in a very derogatory way), I say so. I'm uncomfortable with spillover from another blog entering here--even when they are made with good/supportive intentions--when such comments are critical of another's blog, another's policies or another blogger. There are times for private correspondence (which is why I have an accessible e-mail) and time for public comments. One blogger mentioned in one of the comments is one of my valued readers and commenters and one with whom I've enjoyed participating on Bill's blog.

Though a blog is not a business, there is a similarity. The blog host is the CEO. I was CFO for a long time. I guess, I still am; I'm just dormant. As a CFO you have to have a very clear understanding of one's role. Specifically, I feel that one's role is to not be a cheerleader for the business, but to be an advocate for the business. That means that every business decision should be evaluated on the merits of what is best for the business--not what is going to ingratiate one in the eyes of the CEO or stockholders or whomever. Rarely are any decisions in life or business black or white. While I always gave my counsel and my reasonings for such, it was always the CEO's decision to accept it or not. I never was unclear about that. Further, I am no any less unclear about Bill's or any other blog host's rights for shaping participation. If one finds that such shaping is not to his/her sensibilities, then the decision to opt out of the discussion would be a reasonable path to consider.

Bill has inspired many investors--myself included. He has both my
respect and admiration. However, that doesn't mean that have to agree
with his decisions or his policies. Those are decisions that are his
and his alone to make.

So I'm declaring MY blog backyard "Little Switzerland" and am raising the flag of neutrality!

Did you know?

Did you know that the WSJ provides two reports that you might find interesting.

• Money Flows: Buying on Weakness
• Money Flows: Selling on Strength

These reports are down loadable into Excel.

I have updated my weekly sector spreadsheet. With finding the better capabilities of WSJ's sector information, I have included a sheet that shows ALL OF THE SECTORS over the time periods in addition to the leaders/laggards. I think that you'll find that very helpful.

If you see any issues with the spreadsheet, please let me know.

A Week without Words

More Blog Technical Stuff

To get any of these "background" images to show, you have to create and upload the image. The "home" and "about" buttons are created "background images". The sand in the very background is an uploaded image, as are the sidebar headers, the title and the date header backgrounds.

You have to ensure that the image matches the expanse--height and width. Otherwise, it repeats (though you can tell it not to) or truncates. You probably do not care, but it's a bit interesting to understand what is under the hood when you look ant someone's blog.

I've one more thing to add to the blog--and that is a tabbed menu. I'm not quite ready to tackle it yet. Adding the "home" and "about" buttons required some synapses burning. Anyone who makes their living doing this stuff surely has to laugh. I don't suppose it is really that hard, but when you approach it haphazardly, it ain't so easy!

I watched today Harold and Maude. I've never seen it before. How funny to hear the Cat Steven's music. My brother had all of his music (and that of The Doors). I can still recall the lyrics to every tune for both. Interesting how music/lyrics are so easily burned on the brain. We take music on demand for granted. I think about hearing a favorite song and imagine being born during the time of Mozart, Liszt, Beethoven, Wagner or any of the other greats. You might hear a song a dozen or so times in your lifetime (if that unless you were wealthy).

I also watched last night (my husband had a neighbor visitor last evening, so I seemed to be on my own, which was fine. I always find things to do), Fur, an imaginary Portrait of Diane Arbus.
I cannot really say if I really liked it. I do think that Nicole Kidman is a very gifted actress. I saw her recently in To Die For . I thought it a wonderful black comedy when I saw it before.

As part of my "Connessione" practice, I've been routinely researching the movies/TV shows that I watch to understand more about either the topic and/or the actors. I'm not a celebrity follower in the least. And perhaps my even saying that I'm doing this is causing a chuckle or two among readers. But, I've found by doing so, I'm enriching my experience rather than just watching something without awareness.

Speaking of awareness, our next book club selection is: A New Earth: Awakening to Your Life's Purpose by Eckhart Tolle (Author) . Perhaps after reading this book I may go off to join the circus. I don't know that our last selection, Water for Elephants, was well received by other members. I really enjoyed the book, though others felt that it was too romanticized. I cannot quibble with that assertion However, given the gravity of the reading that the club as well as myself were doing, it seemed to be an oasis of entertainment. I think, too, that given my lack of mobility and my frustration with my physical limitations--in addition to the real danger of falling that traveling one's ordinary courses brings while navigating on crutches--reading about an elderly man's own struggle with gnarled hands, weak legs and wobbly balance was something that I identified with in a very intimate way.

I've mentioned here before what an eye-opener it has been to have to fall upon the support of arms and remaining leg to bear up under additional duress due to an injured left foot. Mine have not been up to the task--though I'm getting there (you should see my arm/shoulder muscles; I'm so proud!). Given some of the pain that I've had in my left foot with only partial weight (the doc said I could do 1/2 weight from the git go, but my foot was too swollen and painful to do that), I cannot imagine that I'll be walking on this foot when I get this cast off. I've 9 more days.

Time to get ready for Easter Meal #1. Tomorrow will be Easter Meal #2.

I was going through my Spain photos. I've posted this one before, but it is one of my favorites.

Tim Wood on FSO today

I'm listening to FSO now. Tim Wood is hosting for Jim Puplova. I'll include some snippets below.

I'm done futzing around with my website. I've been using my down time to (1) learn Adobe Photoshop and (2) to learn how to customize CSS (cascading style sheets). CSS is the programming codes that describe how to display items. It's been very interesting for me to learn how to create and upload the images as well as how to have them displayed properly.

If you find the new colors on the type hard on your eyes, please let me know and I'll soften them. You would be surprised how time consuming it is to pick colors--both background and text to contrast in a way that is readable rather than harsh. My goal is to find the balance of aesthetically pleasing without compromising ease of reading. I want your experience here to be pleasant. Not torture on your eyes. I've got another tweak to do on my date header--to take the beveling out of part of it. Otherwise, I think that it adds enough distinction between date posts.

Here are Tim Wood's comments--a mix of quote/paraphrase. I've mentioned before that I think that he and Frank Barbera are terrific:

The Fed engineered double bottom. Looked like we were on the brink. We were on the edge, looking over the brink. We were ready, I felt like, for a meltdown. How long this engineered bottom lasts, I do not know.

Dow theory non-confirmation (transports/industrials). Joint low together in January. Since then, the transports have performed much better than the industrials. If you back up to the next level, we have the primary trend which is still bearish. Question is how long does this bottom hold. Does this non-confirmation tell us this is a longer-term intermediate bottom.

Cyclically we've not seen a washout. I don't believe that the engineering and manipulation will last forever. Need a good solid foundation for the market to build.

I'm very suspicious of commodities. How is the manipulation going to affect gold and silver. I'm nervous about how far does this rally go? Few weeks, a few months. If we penetrate the January lows, it will be bloody.

Have you seen about 10 different headers today?

Yes, I was at it again. Idle legs are the devils workshop. I wanted a better blog header, so here we go. I like it, but if you think it sucks, I'd value your feedback. The bubbles are to give it a water feel! I also experimented with some other stuff on the test blog--most particularly with lists. For the amount of time that I've spent figuring this stuff out for myself, I could have taken a class. That would be too easy.

Fed Questions and Gary K recap

The Asian markets received some relief from their relentless down turn. With the Fed's offering the window for more types (read lesser quality) securities, an unprecedented but necessary move, I have to wonder if we are not pimping out our country's balance sheet. Unless the credit markets sort themselves out in some meaningful way, how does this get resolved? You know what I'd like to see? I'd like to see (1) who is going to the window; (2) what they are swapping; (3) how they close their transaction in 28 days. It's public money, so I don't feel that they have any right to privacy.

Forgive my crudeness, but if feels like we are pimping out out our country's balance sheet. Since we are a debtor nation, how do such actions give our foreign bond holders more comfort? I suppose that with the USD strengthening, that makes them feel a bit better, and they will not clamor for higher interest rates.

I'm listening to Gary K's show from yesterday. I've summarized some of his comments at the bottom of this post. His website is in the Info Mosaic.

The WSJ's market data page has a much better sector performance than the Big Charts page. It gives one day performance. I've included the link under 'stock/economic' research sidebar heading.

Many of you know of, and I've mentioned a few here, the Ultrashorts and Ultralongs. These can be very lucrative or very brutal vehicles. I wanted to show you yesterday's brutality:




Gary K regarding yesterday's market (quotes/paraphrased quotes):

• The market (DOW) had a follow through day, 8 days from the low; Follow through days are simply a characteristic that takes a market that is in a downtrend and turns it into a confirmed rally. This does not mean a new bull market has started. It does mean that every bull market was presaged by a follow through day. But not everyone of these works (7-8/10 work). We've had 2 follow through days in this bear market;
• The other side of the thesis is important. Leading stocks and leading groups breaking out on heavy volume. There is hardly anything. IF this is going to be meaningful, it will take some time.
• We've had two follow through days in a bear market.
• If we get distribution in two days, I'll let you know.
• Am I in? No.
• Does not mean that the worst is over or that we do not fumble around.
• All the commodities have topped; that is one of the reasons why the market will do better.
• Not a good time to be short.
• I'm off the bearish stance. (L note: that doesn't mean that he's bullish).
• Here are some leaders to put on your watch list--he's got caveats most all of these, so listen : MA, WMT, RIMM, PRGO, Urban Outfitters, TJX, BKE, CMG, ISRG, KEX, Priceline, LKQX, R, LSTR, FLS, NKE, OI,
• You cannot have a bull market with without a ton of leadership.

Whew!

That damn stock market widget is still wrong. I deleted it. If there is going to be any misinformation on this blog, I'd prefer that it come from ME rather than a third party!

The financials blasted off into space. I'll remind that they were among the most heavily shorted of all stocks. It will be interesting to see what next week brings after the shorts have covered to see if some real buyers come in. It is good, though, to see these early cycle sectors (financials, homebuilders) with some strength. But if it is artificial--due to de-leveraging--that could suck alot of folks into the market only to have buying interest shrivel up.

I have to admit, though, my distrust of the charts due to my distrust of the fundamentals. Did we have a relief rally from the better than expected news from the investment banks combined with the Fed commitments. I'm still expecting more news--but perhaps that is my own fear and emotion.

Here are the homebuilders:


I sold my SMN and EEV at the open today. Smart move. I ended the week in the green, but I'm woefully under-invested. I now that Gary K will be looking for a follow through day after today to see if we get into a confirmed rally. I'll probably listen to him in the a. m.

Regarding my reticence when I see moves that are counter to what I think, John Murphy stated something interesting in his missive today. Specifically, that the homebuilders were showing strength, though the fundamentals were dismissed by Wall Street. He noted that when they were degrading materially in 2005, Wall Street failed to take note.

I've not yet learned the fine art of reconciling what I 'see' in the charts against what I 'think'. I have a tendency to over-think things. I take solace in that Cat is confused. We will likely need a consult with Russell's TA kitty to find out sock positions, though she may have grown out of that habit which means we are all lost!

If you celebrate Easter, then I wish you a happy one. I'm feasting on Saturday and Sunday. My payback for doing the Thanksgiving gala, is that I don't have to cook for any of the other holidays!

This time of the year, like fall, offers some crisp sky backdrops. I'll try to hobble about with my camera. My red-buds are soon to be blooming. You'll remember that MarkM suggested a Forest Pansy redbud which I secured. I've check on it this Spring, and it appears ready to burst forth with something! My mature redbud, too, is ready to bloom.

De-leveraging and the 28-Days of the Helicopter

I neglected to mention another important factor in the commodities volatility. De-leveraging.

Hedge Funds account for ~55% of daily trading volume. Many of these HF's are leveraged; and fixed income funds are very leveraged. If you are a nervous banker facing your own leveraging issues--you have to start weaning your clients from the leverage bottle to reduce risk and shore up your own capital ratios. To de-leverage, longs must be sold; and shorts must be covered. Every banker is revisiting his/her credit risks. I'm sure that they are reviewing their HF client's holding and making some decisions about asset and credit quality. From that they are issuing directives.

I'm always intrigued and a bit suspicious of other comparisons to other market events. Perhaps I should set aside my suspicions and remember the subtitle of Selden's book: Human impulses lead to speculative disasters. We are certainly see a speculative disaster unfolding before us! Personally, I want to see greater regulation of HF's and investment banks. In my view, there is something fundamentally wrong with an investment bank (GS) that is marketing a product on one side of the house and shorting it on the other side of the house. It is indefensible, in my opinion. I'm sure that statement will be tested, as I'm confident that lawyers are lining up.

Cat raises the specter of deflation. This is what BB studied and believed that it contributed to the Depression. One still has to wonder if adding liquidity to shore up faltering banks' balance sheets, ever really gets to stimulative uses. I talked about it here in this space in addressing some comments made by Tim Wood and Frank Barbera of FSO. If leveraging bids prices up (housing, commodities, bonds), then de-leveraging certainly must bring asset prices down. I suspect, though, that US Treasuries prices increase are not the product of leveraging, but rather the flight to quality. I would surmise that the "tell" on when to get out of Treasuries would be by watching the financials' recovery. Let's remember that the financials make up 30+% of market cap. So the flight out of financials was met by a flight to quality: treasuries, commodities, and PM. Now we are rotating out of commodities and I guess treasuries, unless money is being stuffed under mattresses.

Apparently CNN had something on last night comparing US to Japan. I did not catch it. I also promised here that I would do some research, which I've not done.

Something to be aware of, and I've not seen anyone really discuss it, is these Fed term loans. These are the "bring out your dead" where CDO's of questionable value are swapped for pristine Treasury securities. The term if 28 days. What process of discovery and/or repair is being undertaken to remove the need to swap these securities?

I cannot help but be bothered that 25% of our country's balance sheet has been pledged to support these species loans. Now, I'm don't wish to sound like a wild-eyed left winger, but we have Social Security (in addition to other programs) that's not funded. They took my contributions and those of my employers over the years and used that money elsewhere. Now the US has pledged their assets to shore up a credit debacle (which I believe was an imperative). At what point in time do these actions impugn the value of Treasuries? Where, then, is the remediation/credit stabilization that will happen in the next 28 days? And, at what point does the US say, this window is no longer open to you, come up with plan B? Hmmm...as I write, perhaps the mandate was, I'll take these securities, you go de-lever and come back in a month.

I don't pretend to fully understand the magnitude of these issues well enough to know if my concerns are misplaced. Nevertheless, I believe these to be reasonable questions.

Jobless claims are up. Who's surprised?

P. S. After I posted, Art Cashin is affirming the banks de-leveraging the HF's. It helps affirm that I'm not deep in the weeds.

Market Ground Hog Day

Seems like the market saw it's shadow today and turn and ran. Readers know that I'm a huge fan of Gary Kaltbaum. His show was interesting today--more in a minute.

Because I'm so underexposed on this market, AND due to the stupendous day with the financials (I think that I can call that a relief rally), I figured that I would step in with some exposure. I bought some EPP. It was up this a.m., reflecting the rebound in the Asian markets overnight. And then it dripped down along with everything else. The smartest thing I did was buy some EEV as a hedge. By the end of the day, I had scaled out of my EPP and kept my EEV.

I've stated here that I thought that commodities should top for the following reasons:

• fundamentals are declining (recessionary pressures picking up) , though the emerging markets are 'talked' up--I considered it a tired, old story--though I agree that the long-term picture is still that we are in a super cycle.
  
• USD$ may be finding a bottom--but it promptly fell further. My thesis is that with all of this CDO crapola, that European and Asian banks would not have as strong a CB response as the US. Accordingly, the US would be seen as a safer haven due to this strength and market transparency.
• commodities had a large speculative run up--these stocks have been run up like the technology leaders (GOOG, RIMM, GRMN, AAPL).

Both bonds, as MarkM notes in the comments, and commodities (including precious metals) have been considered 'safe havens'--the proverbial flight to quality. But at some point in time the safe haven becomes risky due to the asset prices being driven up.

Now, back to Gary. He believes that gold and commodities have topped. There was severe breakdown in the commodity stocks today. He did not like the action today as you might have guessed. I almost feel like we need another floater or two in the financial arena. Any rally that we have without having those floaters is likely to be skittish.

Gary notes that with commodities falling, there is no market leadership--oh, I guess bonds are leading, but that's not a a good thing, I don't think.

The Indices in the Sidebar list are Wrong.

The DOW closed down 293--not 270 as it is currently showing. When I go to their website, it is showing the right data. But not here in Leisa-land. I'll try to figure out the problem. It is also an end of day--so if you visit during the day, keep in mind that it is as of the most recent close. Sorry for any confusion

Today

I'm listening to Gary K now. He's feeling like that there may be a short term bottom in. John Murphy posted this as well. Thinks short term (2 weeks), USD has bottomed; gold has topped.

Housekeeping:

• I created a new widget on the markets. You can click on them to see the graph. I think that you'l like it.
  
• I've updated my weekly sector spreadsheet. Go to the sidebar to click on it.
  
• I've updated my quote box (I had to create an apostrophe image--part of my CSS learning).
  

I bought some EPP today. I think that the world markets will rally a bit after our good day today. It's important to note that neither the economic or inflationary commentary in the statement were positive. I'm not longer grousing about selling DUG or my CNI puts. I still have SMN. I'm expecting commodities to come down. I did sell my UYG yesterday (yeah, I panicked).

I hope that you had a good day.

Your Vocation as Part of a Diversification Plan

On CNBC, they noted that 1/3 of the stock is held by employees. People who thought that their retirements or college educations were paid for were staring at an incredulously low $2 offer. The stock was trading hopefully north of $ 4 and change.

Your vocation as an asset: It's too easy to overlook your vocation as an income producing asset, but it is. Depending on your level you may have any of these:

• stock options ;
• stock grants;
  
• 401(k) with company stock choice;
• employee stock purchase plan (generally at a discount e.g. 15%);

Each of these benefits are wonderful, but they are not without risks as Enron and BSC and any finanical stock whose stock price has plummeted in price shows.

Stock options are granted at a strike or grant price. They only hold value to the extent that the company's stock value exceeds the grant price. Often options are given as retention tools; accordingly, they vest in future periods and have expiration dates. (Of course, you remember the scandals on stock options where they were post dated and the "grant" price was given at ridiculously low prices.) The stock is granted at a price of X. The future price, at the time you are considering exercising, is Y. If X is less than Y you get the gain of Y-X multiplied among your option pricing. You buy the stock at your option price and then sell it. You could elect to buy the stock at the reduced priced and HOLD it.

Look at healthcare. Look at the financials. I can assure you that there are alot of stock options that were immediately rendered worthless. To the extent that folks were not vested in those options, they never had a choice on whether or not to exercise. But if you had a choice, and elected to not exercise your option, the option is currently worthless. Of course, the stock may come back prior to the option's expiration. But that did not happen at MCI, Enron, and it surely will not happen at BSC.

So whatever your situation consider, if you have these accoutrements, consider how your wealth might be effected in a downturn. I'll tell you flat out, that I had ALL of my 401(k) (I had other retirement accounts) in my employer's stock PURPOSEFULLY. It paid off handsomely when my company was purchased. I discussed the risks with my husband, and we both agreed that the risk reward was acceptable. And if we were wrong, we could recover. But it was a white-hot industry with risks that could quantified.

The point is to make considered judgments about your diversification of lack of diversification risks. You don't want to find yourself in a position of having your stock-centered (therefore valued) benefits become worthless, and your vocation--your job--in jeopardy.

I was fortunate to be a recipient of stock options, and I always agonized whether to take them or not. My financial planner reminded me of diversification. I took my partials, and I never looked back.

A Frustrating Day

I should keep some sort of journal on the market action with respect to expected, unexpected or a WTF? I don't think that there is either a word or an emoticon that would describe my feelings on the market today. I will say that since starting this blog, I've never once been tempted to change its name--so perhaps that is saying plenty about what I thought about today. I guess that most days, I'm still perplexed. Sigh!

I closed out of my DUG this morning given the initial strength in OIH. Here's a coulda, woulda, shoulda for you: I think that I should have waited until about 10:15 a.m. I don't know if this is true or not, but that point appears to me to be the point where shorts have covered and if there are no "long" buyers, then the early strength might be seemingly anomalous. Though profitable, I did not optimize my exit, and I left $4 per share on the table--$1200 in gain that I could have managed better. On my $20K spec account, that is material. It is currently all cash. I'm waiting like a praying mantis to strike at something.

I also closed out my BNI APR 80 puts out for the lowest price of the day. BNI was strong like bull given CSX's good report today. I should note that my rail thesis seems to be wrong. CNI, which I closed on Friday, opened poorly. Together, I made a few bucks, but I could have done better. I'm not whining. So money left on and under the table all the way around. Oh well. I've avoided the bulk of the market's demise, so I shouldn't complain.

Bear Stearns cum Two Buck Chuck

JPM is buying BSC for $2 per share. I guess they are the new "Two Buck Chuck" which, if you didn't already know, a $1.99 bottle of Shiraz that is carried at Trader Joe's. I've never had it.

I think that one of the spookiest things is this: If on Friday, BSC had a book value of $85 per share as reported on CNBC and it only fetched $2, that places some serious pressure on the other investment banks.

The overseas markets are falling hard as you might imagine 4-5%.