NEWS #78

From December 23, 2007 to February 2, 2008

February 2, 2008

Here is a really grim article: 'Bank Reserves Go Negative', by Mike Mish Shedlock of Minyanville.Com. I quote it below.

"Given that the Fed is not in a credit tightening mode, we must look for a better explanation. Here it is: Banks in aggregate have now burned through all of their capital and are forced to borrow reserves from the Fed in order to keep lending.

...'Large money center banks have virtually frozen their balance sheets, reluctant to lend even to good credit,' according to Scott Anderson, a senior economist at Wells Fargo.

However, rising numbers of foreclosures are forcing assets on to bank balance sheets in spite of that desire to freeze. It's no wonder banks are spooked by those walking away from debt."

January 30, 2008

Here is a link to an interesting philosophical take on inflation and deflation: 'Crisis of the Real',by Kevin Depew of Minyanville.Com.

January 28, 2008

For a rosy view of the economy click on the link that Duncan sent me to 'The Economy Is Fine (Really)', by Brian Wesbury of The Wall Street Journal. I quote it below.

"The good news is that the U.S. financial system is not as fragile as many pundits suggest. Nor is the economy showing anything other than normal signs of stress. Assuming a 1.5% annualized growth rate in the fourth quarter, real GDP will have grown by 2.8% in the year ending in December 2007 and 3.2% in the second half during the height of the so-called credit crunch. Initial unemployment claims, a very consistent canary in the coal mine for recessions, are nowhere near a level of concern."

For a grimmer read click on the link that Ben Smith sent me to Interview with Jim Rogers, on ResourceInvestor.Com. Here is what Rogers says about Bernanke.

"He's worse. All he knows is to print money. His whole intellectual career has been spent studying the printing of money. America's now given him the printing presses and all he knows to do it to run them. He doesn't know about markets. He doesn't know about foreign currencies. We know now he doesn't even know about economics. I mean, he's got a PhD in economics and he was a professor of economics, but he doesn't have a clue about economics.

I will quote you - I hate to quote you, but one more time - I was watching him testify before congress and I almost fell out of my chair. He said under oath, so we presume he wasn't lying, that he was just a fool, he said if an American only buys American products, it does not matter to him if the value of the U.S. dollar goes down. He will not be affected. I was looking at the man to see if he was lying, giving government propaganda, but then I could see he didn't even really understand.

He didn't understand if, you know, even if say I'm an American, Lindsay, and I only buy American tires. Well if the price of foreign tires goes up, obviously the price of American tires are going to go up too. Plus, if the dollar goes down, the price of rubber's going to go higher, etcetera, etcetera, etcetera.

So the man doesn't even understand economics. He's going to print money. He's going to throw money out the window. The dollar's going to go down further and further and further. Inflation's going to get worse and worse and worse throughout the world - the world, not just America - and we're going to have a worse recession in the end."

January 27, 2008

Here is a link to an article sent by Red and White D titled 'The worst market crisis in 60 years', by George Soros on the Financial Times site. Mr. Soros not only invests well. He writes well too. This is a must read. It is the best explanation I have read for the 'crisis' we are in. I quote it below.

"Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced. The US current account deficit reached 6.2 per cent of gross national product in 2006. The financial markets encouraged consumers to borrow by introducing ever more sophisticated instruments and more generous terms. The authorities aided and abetted the process by intervening whenever the global financial system was at risk. Since 1980, regulations have been progressively relaxed until they have practically disappeared.

...The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves. Until recently, investors were hoping that the US Federal Reserve would do whatever it takes to avoid a recession, because that is what it did on previous occasions. Now they will have to realise that the Fed may no longer be in a position to do so. With oil, food and other commodities firm, and the renminbi appreciating somewhat faster, the Fed also has to worry about inflation. If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate the economy comes to an end."

January 25, 2008

Here is a note from Red and White D.

"Bender,

As you are a trader not a pundit, I am sure you don't concern yourself with such matters as corporate governance since no one seems to be able to change it....bad as it is, but here is a very short story about the captian of the ship being rewarded for steering his ship into a reef. Certainly a candidate for the Titanic Navigation Award.

http://www.footnoted.org/buried-treasure/a- program-of-one-at-cit/

CIT stock is down 2/3rds since Aug. Poor baby, his stock options are not so valuable now so let's give him some more stuff so he won't throw a tantrum and go away. I suspect this BS goes on endlessly in corporate boardrooms.

Ughh."

January 23, 2008

Red and White D sends this link to 'Bernanke is risking his moral capital', by Nils Pratley of The Guardian. I quote it below.

"In the end, though, one is left with the impression that the Fed is making policy on the hoof. The moment for an emergency rate cut was surely 10 days ago, in the wake of Bernanke's comments that 'additional policy easing may well be necessary' If he had followed that remark with an immediate cut, nobody would have been surprised. But eight days before a scheduled meeting? It looks as if the Fed hasn't grasped the pace of events, or is only belatedly recognising the threat in areas like monoline insurance.

That's a troubling thought because confidence in the chairman of the Federal Reserve counts for a lot. Bernanke has now invested much of his moral authority in a dramatic move with an uncertain outcome.

Yesterday's initial market reaction was encouraging, but not wildly so: all the indicators of default risk continue to flash red. Bernanke's tactic had better work, though. Central banks have only one big weapon at their disposal - interest rates - and the Fed is using up its bullets."

January 22, 2008

Vegas sent me a link to 'By a Countrywide mile', by Mathew Emmert of MarketWatch.Com. It is the contrarian view of Bank of America's purchase of Countrywide. I quote it below.

"And as most are likely aware by now, that proved fortuitous, as just last week Bank of America (BAC) announced it would be acquiring Countrywide for $4 billion in stock, which sent the shares soaring. But though the common stock jumped over 50% that day, the preferred shareholders were quite a bit happier, enjoying a better-than 130% gain.

...Yes, in retrospect, the bank was a little early with its October 2007 purchase of $2 billion in newly issued Countrywide preferred shares, which were convertible into about 17% of the common stock. But, consider that for a moment. They paid $2 billion in cash for a 17% stake in the company about four months ago. Today, they're paying $4 billion in stock for the remaining 83%. Oh yeah, that sounds like a terrible deal. Not."

January 20, 2008

Ben Smith sends this link to 'Signs of the Times', by Bob Hoye of SafeHaven.Com. I quote it below.

"To be clear, this is now a methodical bear market and each significant step down can be followed by a rebound that retraces some 40% to 50% of the loss.

...On the big picture, the credit markets are in the worst train wreck in history, which we have been expecting to force a cyclical bear market for most commodities, and related items. Base metal prices are in a bear, as are the Baltic Freight Rate, and stock markets. Grains have been the last to run and the action has become impetuous. This week's crash in agricultural stocks has been impressive. The Baltic is down 37% from the high of 11.039."

Readers should note that while agricultural stocks fell this past week, commoditites, particularly grains, did the opposite.

Here is a link to 'Wall Street Confidential' , by Todd Harrison of Minyanville.com. I quote it below.

"We've also seen the beginning stages of the transfer of wealth as Citigroup (C), Morgan Stanley (MS), Bear Stearns (BSC) and Merrill Lynch (MER) open their doors to foreign investors. These infusions are a function of need rather than want but desperate times call for desperate measures.

To be sure, considering that we've sliced a third of the value from the world's largest financial institutions, the potential for an oversold bounce is viable. If perception manifests that risk is contained, we could see a rally that shakes out the bears and emboldens the bulls. It remains my view that those with a longer-term lens would be wise to lighten when and if that upside arrives."

January 17, 2008

Red and White D sends this link to 'Another hole revealed below the monoline', by Nils Pratley of The Guardian. I quote it below.

"Now here's the really scary bit: Merrill Lynch's ghastly fourth-quarter figures included a $3bn write-down 'related to the firm's hedges with financial guarantors'. The prose may be drab, but the meaning is electric: Merrill is saying that insurers who have written guarantees for certain bonds may not be good for the money.

This takes the sub-prime crisis into new territory. Monoline insurers - the folk Merrill is referring to - provide insurance against the risk that a financial instrument will default. Once upon a time, monoline insurers swam in the gentle waters of state and city debt. In recent years, though, they have taken to insuring almost any whizzy financial product invented on Wall Street."

And here is a link to 'Moody's to Review MBIA "AAA" Rating'

If it looks like Inflation, and quacks like Stagnation, it's Stagflation

As I write this, I am looking down at an ad in my local newspaper for a house, a 1,400 sq. ft. house for sale in my town, Casper, Wyoming right now. Its price is $454,191.00. That house, ten years ago, would have sold for $110,000.00. Its price has increased over four fold in ten years. Yet, the idiots every day on CNBC tell us there is not now, nor has there been inflation in the past ten years. Chances are you witnessed the price of gasoline increase by four times in a period of two years. And if you have been working on your house, you know what has happened to the price of copper wire and copper pipe.

A friend, who lives in Vegas, sent me an article by Peter Schiff. Schiff asks this simple question:

"If manufacturing is at a five year low, how can exports be booming?"

The answer is that ever since we became 'A Service Economy' and quit trying to produce 'stuff', ever since we started exporting jobs, our exports have shrunk. The fact is that no one around the world wants to buy U.S. produced 'service'. They want 'stuff', and if we're not making much of it. We don't have much to sell.

The answer is that exports are booming. But that excludes that they are booming upward from an abysmal level. And it excludes the fact that, with the U.S. consumer accounting for 70 percent of consumption, 70 percent of the economy as it were, exports can go crazy, exports can throw a wild fling and invite Britney. It doesn't matter. Exports are not going to keep us out or lift us out of recession.

Here is an incovenient fact: Economic Growth causes Prices to Fall.

Here is another: Greater Productivity causes Prices to Fall.

And here is another: Inflation is an expansion of money supply without a corresponding increase in productivity.

Now follow this logic closely. ... If, as I suggest above, prices are now, and have in the past, been RISING, that implies that:

• 1. Real economic growth has been negative.
  • The tools the Feds use to measure economic growth are seriously flawed.
  • The Feds themselves may not realize just how seriously flawed their tools are.
  • Even the data put out by them for the past ten (at least) years is unreliable.

• 2. Productivity has actually been declining, even as the Feds report the opposite. (Ain't a Service Economy great?)
  And this begs the question: Just how good are the Feds' tools at measuring productivity?

• 3. The Feds felt free to expand the money supply because their tools told them that productivity was expanding at a rate almost equal to the expansion of the money supply (Greenspan ad naseum). (Cue the banana peel.) Ooops! The Feds have expanded money supply in the past far beyond what real productivity was doing. Now, to 'avert crisis' they are 'shooting the moon' with money supply expansion (Cue the rocket lifting off the pad.) And boy howdy pardner do we have inflation now!

• 4. The falling dollar is a belated measure of real inflation. I say belated because there is a time delay. When you look at the dollar you are looking at how bad inflation was 6 months ago. It could be a lot worse right now. With M3 expanding at 17 percent, it certainly is a lot worse right now, but that won't show up for 6 months.

• 5. 'A Service Economy' is a euphemism for 'A Consumption Economy' and we really don't know how far deep in the hole we are in terms of Economic Growth and Productivity. A Consumption economy works only so long as all the lemmings keep jumping over the cliff, keep taking on more and more debt. It works just as long as the lemmings keep telling themselves that a 1,400 sq. ft. house is really worth $454,191.00, and that they really will be able to afford those payments when they baloon out to $5,000.00 a month.

• 6. The lemmings are having second thoughts now. They have stepped back from the abyss. That hesitation is killing the Consumption Economy.

January 16, 2008

Here is a link to 'Energy, Food Costs Balloon US Inflation', by Martin Crutsinger of AP. I quote it below.

"Consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006, the Labor Department said Wednesday. Consumers felt the pain when they filled up their gas tanks or shopped for groceries. Prices for both energy and food shot up by the largest amount since 1990.

In a second report, the Federal Reserve said that output at the nation's factories, mines and utilities showed no growth in December, adding to a string of weak economic reports showing that the economy was slowing at the end of last year."

Rich Kolon recently responded to a question and sent his answer along to me. I know my readers are always wanting to know what Rich thinks. So, here is that reply of his.

"Essentially banks have tightened up on credit lending. Just like in 2000-1. Then stocks sanked. CREDIT keeps the U.S. economy going.

Granted, many lenders were GREEDY the last few years. They did not care whether borrowers could reasonably repay the loans. They SOLD those mortgages in bulk to GREEDY pension funds, companies, etc, who wanted higher montly income, and forgot about the RISK OF DEFAULT, where you may not even get principle. The lenders thought they can keep finding suckers. Whoops!

So we will go thru another contraction in the economy. Ordinarily bad for stocks,

However Helicopter Ben Bernanke is determined to fight a 'Japan' style perma-stall of the economy. M3 is going thru the roof., +17% year over year.

http://www.nowandfutures.com/key_stats.html

No wonder the U.S. government stopped reporting M3 in early 2006. They KNEW what was going to happen. Wars are expensive, and the government can't afford to let the economy contract, and total tax revenues to drop.

So now we have plenty of cash, much lower interest rates to get rid of it, but lenders who are magically 'conservative'now about who they lend it to.

And gold is now at all time nominal highs above $900 an ounce.

When lenders get less skittish, stocks will begin their bull market. Just be mindful that the dollar will be worth less, and American stocks won't be really as valuable, even if they do go up one day.

I just gave you the fundamental rationale for a bear market.

While some sectors may do well in bear markets, it tends to be rather hard to consistently be in the right sectors, as money rotates between them and profit taking is faster.

How do we know if we technically are in a bear market?

Check out my QQQQ 20-week moving average:

http:// stockcharts.com/h-sc/ui?s=QQQQ&p=W&yr=1&mn=6&dy=0&id= p13919769305

See that high of the QQQQ at $54.97? It occurred near the top of Bollinger Bands. Then we made a low at $48.68 near the 20-week moving average. But the next rally did NOT go up to $55. It only went up to $52.49. Then it sank to $46.92. We did NOT make a higher high. THAT ENDS THE BULL.

In fact, we are well below the 20-week moving average, which is a warning that profit taking has occurred. But the lack of a higher high is confirmation that the major trend has reversed.

Picking stocks in a downtrend tends to be very difficult. If you have to stay in stocks, foreign stocks may do better, as the dollar depreciates in value.

But I am seriously thinking of playing a bear market by making big bets with the Ultrashort QQQQ ETF, symbol QID. Here is a chart:

http:// stockcharts.com/h-sc/ui?s=QID&p=D&yr=0&mn=6&dy=0&id= p91058887254

The general idea is to buy when the QID is near the lower Bollinger Band, and sell it near the higher Bollinger Bands.

Right now is not the time to buy the QID. The chart indicates the QID is not near a low.

Now I admit I own some individual stocks. Many are companies in Canada, China, and elsewhere. Some are gold and silver companies. But a good deal of my money is in bond funds, or stable value, where I can't pick individual stocks.

This QID may become a significant part of my portfolio soon. I don't own it right now.

Note: I don't accept responsibility for your portfolio results. You are solely responsible for your portfolio. Any use of my ideas is at your own risk. The best way to reduce risk to be diversified. My ideas sometimes fail.

Rich"

January 13, 2008

Here is a link to 'Bernanke Hits One Out of the Park',by Kevin Depew of Minyanville.com. I quote it below.

"Bernanke's speech yesterday was a rigorous departure from anything former Federal Reserve Chairman Alan Greenspan ever crafted, and that is probably why it was so very good. What was absent was the Greenspan-esque obfuscation and sophistry - the public speaking technique the former Fed Chairman perfected so well and, with any justice at all will, for which he will one day be vilified, rather than praised as "The Maestro."

Instead, there was an honest assessment of the problems facing the economy, and a clear declaration of the Bernanke-led Federal Reserve's macroeconomic goals and objectives placed squarely within the context of what this Fed believes is its dual mandate of promoting maximum sustainable employment and price stability."

Florida has written a meaty note that I will share with the rest of you. I have taken the liberty to slightly alter it. But what remains is still true to his original message.

"Hi Bender,

I suggest that Jay's submission was delivered prior to the 1000 point drop in the Dow since 12/27. I still find it difficult for any Advisor to suggest a buying opportunity is at hand. I did not read in depth J/S analysis so will reserve further comment.

The NIKI-X, on a weekly basis, is beginning to show what I believe will be the future pattern of our indices. As suggested earlier, [we will see] a pattern of 10-12 week down cycles based on the 50 day moving average, with occasional counter 'parades' to be enjoyed if your seating was no later than sunrise at the latest.

I am suspect of BofA taking on CFC. The complexities of mortgage resets that will go on well into 2011 is a disaster that can only be camouflaged by this acquisition along with Govt. winks and blinks that any reserves required to keep this ship afloat will be made available. In other words the Fed will loan 100% on 0% assets at the Fed window. This is a bail-out plain and simple and will not be the last.

In general, the next few weeks are going to become very ugly. There will always be trading opportunities, but [we should be enlightened] by these realizations:

• 9000 hedge funds will have to meet redemptions
• an awareness of a pending recession (depression in 2010)
• real estate failures on all levels
• litigation to follow
• massive failure on debt structured LBO's that will not even meet cash flow expectations of 2-3 years ago.

Even in my own beloved state of Florida [which is] not only looking at a 2 billion loss in its Money Market account with Merrill, but [is] an obvious train wreck with property tax valuations vs. market value, which is yet to be established. [My] best guess is [that market values are] at least 20% below home owners dreams. [There will be huge] collateral damage from the loss of home building.

My effort in this discussion is to hope that you refine your trading to a higher level of discipline. Trades can be made on both sides, but I suggest that, until advised differently, seat belts will be required till further notice."

January 9, 2008

Jay Steele sent me his latest thinking. Here is a quote.

"When we look at the market here we recognize the poor shape it has found itself in but clearly from our technical perspective we believe once again we have hit the support off a massive multi year 'Symmetrical Triangle' and offer much evidence to suggest we may be at or near another major short term buying juncture in equities.

...It's our belief here that price is 'coiling' within this triangle shape and together with tell tale decrease in volume on this recent pullback, we argue that in conjunction with other indicators we are advising our clients to take the other side of the now crowded exit doors."

My own take on the markets is that we have now reached a point where a short term rally is more likely than more downward tracking.

January 6, 2008

The Red and White D sent me this link to 'E*Trade figure does not compute…', by Michelle Leder of Footnoted.Org. I quote it below.

"As both the release and the multiple press reports noted, the $10.9 million was based on 'two times the sum of his base salary and bonus during 2006'. So I decided to go back to the proxy that E*Trade filed back in late April to do a bit of fact-checking. Turns out that two times Caplan's 2006 salary and bonus is only $1.5 million (his salary was $750K and the bonus was listed as zero). Even adding on the options and stock awards that Caplan received ($1.7 million and $2.6 million respectively) and doubling that figure gets you closer: $10.17 million and throwing in another $300K for the doubling of 'all other comp' gets you closer still. But that's not the same as 'two times salary and bonus during 2006'."

Here is a link to 'Five Things You Need to Know', by Kevin Depew of Minyanville.Com. What really caught my attention is the section called: The Coming Cleansing.

If 'cleansing' is a way to scrub away false value, then we are long overdue. Whether we want, or not, it is coming.

Florida writes:

"My earlier discussions of cyclic failure have proven to be correct in Financials, Retail, Home Builders . My failure was to discern the global demand which so far has enabled other sectors to remain in uptrends. Based on that analysis the market will continue to be most challenging to trade but with much opportunity for those nimble to recognize early leaders. Fair Warning: Don't be late to any parade!"

What Florida refers to at the end there is the tendency to have very sharp, short rallies in a market that is trending down in the longer term.

January 2, 2008

The Orange Section sends along this link to 'Global Central Bank Focus (Jan. 2008)', by Paul McCulley of Pimco.Com. This is a great read. I quote it below.

"Not exactly, though I've known bond traders with the proclivity. The essence of Minsky's FIH is that stability is destabilizing because capitalists have a herding tendency to extrapolate stability into infinity, putting in place ever-more risky debt structures that undermine stability."

January 1, 2008

December 29, 2007

Here is a link to '2008 Outlook: I Don't Know', by Bennet Sedacca on Minyanville.Com. I quote it below.

"When Bernanke took office, he deemed M3 to be irrelevant and the Fed stopped releasing the data. The data is still available from other market participants, and I have continued to highlight M3 and credit growth over the past 18 months. I have been watching it soaring off the charts, with M3 growing in the 18% annualized range. Credit growth is soaring as well. Below you will find a chart courtesy of www.nowandfutures.com highlighting the point that credit and M3 are growing exponentially. Even with all of this extra money and credit, the economy is not growing? This is Zero Hour defined. With all of the debt service consuming new money and new credit, we have reached the financial 'Day of Reckoning' when money and credit growth no longer stimulate [economic] growth."

Did you catch that last bit? Boy, that makes you want to run out and buy more shares of GM, doesn't it?

Have you noticed our role reversal with Asia. Once, it was the debtor, now we are. Once it relied on our growth. Now we rely in its growth. Our own growth is going to be so anemic in 2008 that our only bright hope will be our exports.

December 28, 2007

The Red and White D writes:

"Bender,

This little article unfortunately beats up on the mortgage dead horse some more, but it brings out a very important point about commission sales and risk evaluation.

http://marketplace.publicradio. org/display/web/2007/12/26/year_of_subprime_q/"

Red and White D gives this quote:

"The experts, the people that we bring in to do some of this risk assessment, they're also private companies in a market looking for market share. So, guess what, maybe some of their risk assessments are going to be skewed from time to time based on their overall incentives to increase market share or to pursue some other goals."

Then Red and White D continues:

"Commission sales just seem to work that way. There is a built in conflict of interest. When I was an underwriter (whose job it is to asses and price risk) I noticed that some insurance agents (commission sales agents each one) with whom I worked would submit some real slimeball risks, with a perfectly straight face and expect us to approve them. Most of my work was with commercial fleet auto policies and when the driving records of the drivers showed up with a bunch of DUIs you really didn't want to insure that risk at all.

If, as a beginner in the business, I rejected an application, or placed restrictions on it, I was as often as not over ruled by higher authority. The pressures of cash flow and commissions are simply so great at times that they become irresistible.

So, now we all know what happens. What we don't know is how, if any way, it can be fixed. Probably not in this lifetime. Until that later time, Caveat emptor."

December 26, 2007

Here is a link to 'Too Big To Fail, by Jeff Saut on Minyanville.Com. I quote it below.

"In the past, whenever the U.S. trade deficit improved, the S&P 500 has tended to outperform the EAFA Index (Japan + Europe). As the good folks at GaveKal opine, 'This make sense if one assumes that, instead of detracting from U.S. GDP, trade actually acts as a net-positive on growth and that the earnings of U.S. companies become supported by the undervaluation of the U.S. dollar.'"

We are already seeing well heeled foreign firms sue our financials for selling them AAA rated bonds that turned out to be a lot riskier than represented. Ah, tis the season of the tort.

There is still much in our economy to cheer about, including the growth of our exports due to the cheaper dollar. I think many US corporations are going to do just fine in 2008, Even when other parts of the economy soften and then turn south. There are tons of dollars out there, and the FED is pumping in more every day. Those dollars have to buy something, and I think a lot of them will be spent buying the stocks of still-hot US companies. 2008 is going to be a strange year for trading. Longs positions may be even more profitable this coming year than they were this year because more folks will be attending the good horses and fewer folks will be content to ride the tired horses.

The real mortgage/housing debacle takes place in 2008. What we have seen so far is a pale foreshaddowing of the ogre that will soon be camped out on the front porch of the US economy. Even so, opportunities will abound in the coming year.

December 24, 2007

Here is a link to 'How Not to Ruin Your Life, by Ben Stein on the Yahoo Finance Site. I quote it below.

"But housing is only about 5 percent of the economy at most. If it falls by half or a third, that's a big drop. In an economy like ours, though, where there was a severe labor shortage before the housing correction, the labor shortfall can be readily absorbed by other sectors, and it is.

...Unwary buyers were sold mortgages they couldn't pay for, and are now in trouble despite the president's new mortgage-rate-increase moratorium. And extremely unscrupulous people sold immense bundles of precarious mortgages to institutional buyers who didn't know what they were buying. In some sad cases, the investment banks that sold the mortgage bundles were selling similar instruments short even as they sold the bundles to the innocent."

December 23, 2007

You can now click here and download Jay Steele's market commentary.

Here is a link to 'Still Time to Consider the January Effect', by Rod David of Minyanville.Com. There is another effect that Mr. David does not discuss. What if you have a big loser. Before year end, you might well pick a big winner to cash in to offset that loss. This is another class of stocks to be looking for as the year ends. My point is that there are some real bargains out there this time of year.

Here is a link to 'This Is the Sound of a Bubble Bursting', by Peter S. Goodman of the New York Times. Our friend 'Florida' was dead on when he described what was happening in Florida earlier this year. What a mess!

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