"02/18/09. Cover all shorts and go long the S&P 500." I believe we have successfully retested the 11/20/08 lows (7,552.29) in the DJIA, with many glaring "downside non-confirmations." I look for the economy to start improving in coming months. From a short-term and long-term perspective, I'm bullish on stocks, quality corporate and municipal bonds, and real estate. The world is now on sale. Hopefully, this bottom will hold and the economy will start slowly improving. Let the next bull market begin.

Suggested asset allocation (Permanent Portfolio):

. Cash--10%

. Bonds--1% in fixed income for every year old that your are; e.g. top quality CDs, tax-free bonds (AA or better G.O.s, P/Rs, or ETMs), or corporate bonds (AA or better non-financials). Treasuries are too rich, at this time. Choose a maturity that addresses when you want your principal back. Choose straight, non-callable bonds--not bond funds. Some may prefer a "laddered" bond portfolio.

. Stocks--(balance of funds) S&P 500 Index Fund, with dividends reinvested. During retirement, either live off the dividends or establish a 4% systematic withdrawal program.

. Real Estate--Personal residence, conservatively financed (i.e. 20% or more down, with the balance in a 15-year straight mortgage). Ideally, you want an energy efficient home in a tax-free state. If you have been renting, take advantage of Government tax credits and financing to buy a quality, inexpensive house, while the market is weak. Seize the opportunity.

Cash and bonds are your depression hedge, while stocks and real estate are your inflation hedge. Remember, serious recessions and depressions offer the opportunity to make a quantum leap ahead in your standard of living. Run towards them, not from them. It's important, however, not to be too early: aim.. . Aim.. . Aim.. . Fire! Hopefully, someone will find this advice useful in these difficult times.



Quality Investments . . . the Hallmark of Wealth

SEC Reform

It's about time the Congress dressed the SEC down over mark-to-market accounting:

Lawmakers Press SEC, FASB on Mark-to-Market Change - Financials * US * News * Story - CNBC.com (http://www.cnbc.com/id/29656545)

The SEC has tremendously damaged this nation, by foolishly adhering to this accounting policy and by eliminating the uptick rule. The Congress should have declared "marshall law," long ago, and prevented fair value accounting, under FASB 157, from being enforced during this national emergency. Only the SEC, in its "infinite wisdom," could have rolled these out at a market top in 2007, creating a "perfect storm" for short sellers. Few of these short sellers, I'm sure, ever served in the military and fought for this country, which they were trying to destroy. Their only concern was making obscene amounts of money, as the financial system imploded. False rumors, hyperbolic bank analyst reports, and credit default swap manipulations "softened up" the markets for massive "shock and awe" short sale attacks. For 18 months, I've tried to get the SEC to relent on these pro-cyclical policies. I told them then that they would bring the financial system to its knees, if they didn't. Now, 11 trillion dollars later, they have succeeded. The wealth destruction has been unprecedented. Instead, the SEC should have allowed mark-to-cost accounting, allowing commercial and investment banks to earn their way out of the recession with the help of a positive-sloping yield curve. Washington needs Texas common sense: reinstating the uptick rule and eliminating mark-to-market accounting, for 18 months, would go a long way toward healing the economy, without costing the U.S. taxpayer a penny.

It's time all U.S. Government pensions, including those of the President, the Congress, and all federal employees, are indexed to how well the economy and stock market perform. This way they will have "skin" in the game and it will affect the quality of policies enacted. At the end of the day, the function of government is to provide a fair economic system for its citizens. Fair value accounting, during a great recession, is anything but fair for shareholders, the banking system, or the taxpayer. Real people suffer unnecessarily because of it.

The SEC's chief accountant needs to be replaced, more examiners need to come from the financial services industry (and be thoroughly trained in detecting fraud, so that they are more than box checkers when they perform their reviews), and a chief systemic risk regulator appointed. Examiners need to be seasoned "foxes," who have seen it all, not just attorneys. They need to be thoroughly trained in options, futures, derivitives, and advanced forensic accounting techniques. These examiners need to be offered major incentives to go after big, sophisticated, "fraud whales." Overall, I'd like to see common sense prevail at the SEC. As a nation, we can't afford any more screw-ups. Therefore, the Congress needs to remove accounting oversight from the SEC and keep it for itself.

Doesn't anyone listen to me anymore!
\
http://moransinc.com/forum/img/smilies/cramer.gif

Jim Cramer, in my opinion, is extremely unprofessional and not credible. If it weren't for the First Amendment, he wouldn't be able to get away with his "act," especially if he worked in the financial services industry. Regulators would have shut him down long ago.

"Build 'em at the top, demolish 'em at the bottom."--TxGreaseMonkey

There will never be a better real estate "buy" signal than ABC's story the other night on new housing developments being demolished in California. It smacks of the bottom in Texas oil prices in 2002, as the media showed wells being capped. Reinflation has begun.

The market is climbing the rock face of "El Capitan." Dangerous? Yes, but it's a world-class climber. It has much further to go. Relax and enjoy the show.