The pace of pain and despair is accelerating.

• The pace of pain and despair is accelerating. The erosion of wealth and confidence is more widespread than ever (it is worldwide and billionaires are losing fortunes too). Government leaders are scared and no longer trusted, company execs are as downbeat as ever, and individuals are fighting for their financial lives. There is little doubt that most are more concerned about survival than profit at this point (I am still looking for profit for what it’s worth). In a nut shell, people are freakin’ out.
• Our current state is unlike anything anyone has ever seen before (60% of people own stocks in some way, there are trillions in derivatives, and debt levels are unprecedented). If you are participating the last 2 months, or even just watching while sitting in cash, you are feeling the frustration, fear, losses, and depressing wonderment of what the heck is going on and when and how will it end or just abate somewhat. One thing is becoming obvious, Ms. Market is going to make sure as few people as possible are on board whenever we do see a monster rally (yes, there is one out there).
• In the most dangerous market ever, we can try anything as long as we are disciplined and define the risk. My positioning the last few days is not an all or none last stand…we are diversified and have protective stops. I am willing to risk 3-7% here and there in an effort to make 20-30%.
• One month T-bills now yield .02%. This means $1 million in a 1 month treasury will earn you $16. Seriously, I would rather bet $16 on a football game this weekend. 3 month treasury yields are now a paltry.14%. This means $1 million in a 3 month treasury will earn you $350. I don’t know about you but I would be happy to take a loan for $1 million for the next 3 months and double that return and pay someone $700.
• Please preserve some capital by not going all in and just closing your eyes and hoping for the best. The declines we are seeing this year make the crash of 87 seem like a walk in the park. There will be a day when we can make 3, 5, and 10 times our money (in numerous options)...but you must have some money left to participate.