As we have repetedly said, at this moment, we feel that the only viable strategy (unless you are actively trading) is to keep on averging into a long-term portfolio (we pefer all etf) and that’s simply it.

We neither support the endless printing of money/mortgaing future generations, nor believe in a jobless and creditless recovery! Reality will have to surface sooner or later…

For some interesting reading, we offer you a strong recommendation for your blogroll:

http://macro-man.blogspot.com/

The past two months have see the price of oil rise by almost 50% whilst most other commodities are also rising fast (i.e. copper +30%) but with unemployment claims well over 600K, continuing claims continuing to rise… well on our way to a double digit unemployment figure? Are we missing something here?

We still have to see how Madoff and Stanford play out and all of this, as we start entering earnings season… we may be pessimistic but we would suggest investors brace themselves for a bumpy ride!

Despite predictions that the recession will end soon and all of the positive talk coming from Washington, the Enterprising Investor needs to remember that the markets are NOT the real economy and even if markets tend to recover months ahead of the economy, we still cannot ignore the fact that consumers have lost sight of the real situation: we still have massive housing inventories, banks are not lending, the price of oil is rising, over half a million workers have been losing theirs jobs each month since last October, and not to mention toxic assets held by German and British banks, the situation in eastern Europe and so on….

The world has never faced this type of situation and we find the fact that  general sentiment appears to be improving and stock markets continue to rise quite unsettling.

We may be wrong but we still feel that the fundamental problems that caused the downturn have not been resolved and that the only REAL action from governments has been to print more money… wasn’t one of the main reasons that got us here the availability of cheap money?

Companies are not making money, banks are not lending and most experts and business leaders remain very cautious… but once again, greed in fueling the move up. Too many people – despite knowing that we are still in trouble – are scared of missing out on the rally and keep on pushing prices higher… how long will this last, or better said, how long can this last?

OK, things are stabilizing but enough for a 30+% rally?

At this stage of the game, we should not be surprised but we do feel it is a shame that someone like Lula (who appears to have done a good job in Brazil) publicly rants in this way, especially before the G20 meeting…. here are some of his comments:

• “I am not acquainted with any black bankers. This is a crisis that was caused by people, white with blue eyes. Before the crisis they looked like they knew everything about economics … Now they have demonstrated they don’t know anything about economics.”
• “As I do not know any black or indigenous bankers … I can only say it is not possible for this part of mankind, which is victimized more than any other, to pay for the crisis.”
• “It is a crisis caused and encouraged by the irrational behavior of white people with blue eyes…”

We are not going to waste any time trying to counter these comments… In any case, expect some interesting discussion at the G20!

Is spending over 70 million to help people who aren’t paying their mortgage the way to go? Should we bail out people who shouldn’t have taken these mortgages out in the first place and what about the people that are actually struggling BUT making their payments? Are we going to end up like Cubans?…

Rick Santelli probably had the courage to say what’s on a lot of people’s minds…. enjoy:

The sad things is that he actually manages to capture the overall mood in the States… highlighting the severe strain the whole country is facing…

Not only has Madoff ripped-off investors around the globe – including charities, college endowments, friends and family – amounting in losses of at least $50bn. But it now appears that he actually planned to hand out a $300m bonus to himself and some lucky few before turning himself over!

The main problem is that he was running out of time and that is why he tried to convince some senior employees of his firm that he needed to pay-out this bonus in December instead of February… luckily he got reported to the authorities and it didn’t go through…

Unfortunately, one can never underestimate how far some people are willing to go…

What do you think?

Most people realize that it will take time for the situation to recover and that there is no miracle cure but what the markets are looking for (and the general public) is a sense that governments are willing to address the situation quickly… a sign that they really understand the urgency we are all facing…

As we write this, the futures indicate that markets are likely to open more than a few percentage points below yesterday and that the sell-off will likely continue…

One of our readers sent us a link to an interesting video about what happened and why we find ourselves in the current situation… here is the soundtrack: