I’m making my New Year’s resolution early this year. I’m done pretending that we have honest markets. I know most of you are already fully aware of this, but I’m gonna throw one last chart out for those who might remain unconvinced:

When I heard that the SEC was going to shake its proverbial finger at short sellers and threaten to do its job, I didn’t exactly rush to see who was on the “Sacred Cow” list.  No brainer, right?  Big regional and money center banks, the shakiest of the investment banks.  I really would have thought that I could have guessed about 15 of the 19 names off the top of my head.

Then, I saw the list. 

First of all, there is no such thing as the Plunge Protection Team.  It’s the super-hero nickname for the Working Group on Financial Markets.  In case you haven’t noticed, they haven’t exactly been living up their moniker lately.  All jokes aside, I truly love this country, as I’m sure those in charge do.  What follows is what I think might be a win-win solution (although I hate that phrase).

You’ve Got Problems…

What started out as a seemingly contained problem with sub-prime mortgages has metastasized into a full blown financial meltdown. There is now a very real crisis of confidence in Capitalism in general and America’ future.  You can’t blame anyone who doesn’t want to deploy new capital.  We see record amounts of money in money markets and shorting stocks.  I hate to be the one to tell you this, but we don’t trust you. 

The Analogy

You’re a sports writer covering a baseball team.  Your team loses 15-0.  All fifteen runs were scored in the top of the first inning, but for some reason, that detail escapes your column.  Instead, you report the score, complain about the price of hot dogs, comment on tomorrow’s weather forecast, and sprinkle in some comments from a psychic.  The contour of the game is not even worth a few keystrokes? 

Here’s an intra-day gold chart for Monday’s (6/23/08)

My favorite fantasy role-playing game is one I invented called, I’m Smart and I have a Time Machine! (I’m working on a better title, so step off).  The object is to develop a strategy for a given time period

My latest challenge is the 1970s.  The word stagflation is creeping back into the national vocabulary, and I heard “Disco Inferno” last weekend.  I’m not sure if these are omens, but I’m not gonna wait to see Dennis Kneale in a leisure suit before I make a plan.  So what were the right moves in the 1970s? 

On July 6, 2007, our pals at the SEC stopped sitting on their hands long enough to repeal a rule that was introduced in the Securities Exchange Act of 1934. The "uptick" rule or Rule 10a-1 required a short sale could only take place at a price higher than the previous trade. Basically, when a stock was getting hammered by people who actually owned the stock, you couldn’t short it until someone bought it (thus creating an uptick).

I’ve decided that this is the stock pick that I want to be remembered by. It is Shutterfly (Ticker: SFLY). My time line is forever. It’s not about the numbers (which are not bad). It’s about my chubby, adorable grandson, Connor Matthew.

What a week, huh? I'll bet you wish every week was just like last week. Be careful what you wish for, America.

Last week, the S & P 500 returned 2.8%, thanks mostly to the proactive Fed rate cut of 50 basis points. Do you realize at that pace, you could turn $10,000 into ONE MILLION in just 167 weeks (3 years and 3 months)? That's right, baby (check the math). That's why you stay in the market. That's why you vote republican. Swimmin' pools, movie stars, you get the picture.

Wikipedia says:

The placebo effect occurs when a patient takes an inert substance (“a sugar pill”) in conjunction with the suggestion from an authority figure that the pill will aid in healing and the patient’s condition improves. This effect has been known for years.

Hey, do you remember that game mouse trap? You built this ridiculous Rube Goldberg machine whose only function was catching mice (other players). Here’s the description from wikipedia.org:

The player turns the crank [A] which rotates the gears [B]) causing the lever [C] to move and push the stop sign against the shoe ([D], which tips the bucket holding the metal ball [E] which rolls down the stairs [F]