Buy the Lows? If Only It Were That Easy

| About: Financial Select (XLF)

Believe it or not, the US misery index has only gone up .5 from 9.18 to 9.68.  Only four banks have failed so far this year. This may seem like a lot, but as you can see from the chart above, 2002 was much worse, and if we see a failure a month the rest of the year, we still won't match the 2002 numbers.

The savings and loan crisis of the late 80s and early 90s had many more failures than we've seen from the subprimes so far.

The big banks and Wall Street firms have been hit the hardest in this cycle of lending gone astray.  In the movie Young Frankenstein there is a scene where the young doctor says, "Could be worse."  His assistant Igor replies," Could be raining." The next sound is a crack of thunder with a flash of lightning and then a sudden downpour of rain.  If you are wondering if it could get worse the answer is yes but this isn't the movies either.

In the real world, there is no preordained script.  You need to improvise, adapt and overcome as the Marines would say.  Some people don't like to hear the truth, but as I used to explain to a former client of mine, they don't ring a bell at the top and they don't ring a bell at the bottom.  We'd all like to place orders with the exchanges that would be, "Buy this at the low for the year. Oh, and by way, sell it at the ten year high."

If life were only this easy.