I am not talking about currency investing.  I am talking about investing in a stock because of the value or direction of the dollar relative to other currencies.

Over the past several years, fund managers, stock research firms and the media have often suggested that you should invest in stocks based upon their percentage of international operations and try to play the currency effect.  Meanwhile, I said that the weak dollar is a stupid reason to invest in stocks and I still say it. The theory went that a high percentage of foreign operations means that the company would benefit during a weak dollar period.  Of course, this concept went a long way to try and generate buying for large cap stocks and specifically humongo multinationals that had underperformed for many of the previous 6 or 7 years.  Did I mention that many of the brainiacs pumping this idea to the masses were managing funds that were heavily loaded with multinational stocks that had been hurting their performance?

Worshiping Warren Buffett seems to be a pastime of the financial media and all his cult or disciples or whatever you call them.  Personally, I am sick and tired of hearing about how many Cherry Cokes he drinks or cheeseburgers he eats or what he thinks about politicians or bailouts or just about anything else that CNBC wants to fill its airtime with.  Oh my!  You cannot criticize Warren Buffett!  Who are you to criticize Warren Buffett?  He is the greatest investor of all time!

First of all, I have not yet criticized Warren Buffett.  I am criticizing the infatuation of others and the idol worshiping of Warren.  Those are two different things.

It’s tempting for many people to do thematic investing.  Listen to smarties appearing on financial entertainment and it’s almost impossible to miss. 

Sometimes it’s addressing macroeconomic themes like slowdown or recession and you get treated to how smart it is to be “defensive.”  Note that I don’t intentionally go defensive.  Similarly, when the economy starts to pick up, you might hear about “early cycle recovery” picks.  Note that I don’t intentionally go aggressive.

It looks like the guy that tried to bring us the Super-SIV is getting close to a much bigger fiasco that some people are calling a new “RTC”.  Sadly, a week ago while having lunch with a close friend I suggested that the government would likely set up a big bad bank entity and try to put all the crap from the financial industry into it in one fell swoop. I just got a bad feeling when I heard that Paulson was fixated on the good bank/bad bank concept as his solution for Lehman.

Why stop there?  Why stop with just doing one investment bank at a time?  Of course that never worked out with Lehman because no non-governmental entity wanted to touch the same stuff they helped create.  So it is only the next evolutionary step for a socialist like Paulson to resolve that problem and replace the nonexistent buyer with the US government.

Most people say “flight to safety.”  I just don’t think Treasuries are the definition of “safety.”  Some people say “flight to quality.”  I just don’t think Treasuries are the definition of “quality” when they represent the financial condition of this country with its deteriorating tax base, its overleveraged consumer, its increasingly unemployed workforce working in lower quality jobs, its devaluing real estate, its trade deficits, its budget deficits, its excessive government spending, its expanding and underfunded social programs,  its expanding list of failed banks, its underfunded FDIC, its underfunded and reckless PBGC, its deteriorating Federal Reserve balance sheet, its nationalized financial system, its pathetically weak fiat currency…

But if you want to suggest that piling all your money into short term Treasuries is a “safer” bet than equities, I have to agree with you, for now.

AIG (AIG) is now owned 80% by the US government  - another nationalization of our financial system.  I am no longer shocked by anything the President, Fed, Treasury, and Congress does.  Other than sovereignty (the right to do it to ourselves), why we ever fought the Cold War is beyond me.

Here is the Federal Reserve statement announcing this decision.  As expected, they invoked the exigent circumstances clause (13-3) of the Federal Reserve Act.

The S&P and Moody’s downgrades of AIG (AIG) have happened and this will rapidly push this situation to an end… either an end that prolongs the drama or The End.

If the government cannot find a way to ignore their lack of authority to lend to AIG and wiggle out of their suggestion that they will not make the loans, I do not expect another situation to arrive fast enough that could save AIG.

Click here to watch CNBC’s Charlie Gasparino (at about the 45 second mark) say that he has some insight from Jamie Dimon and other JP Morgan officials that they feel “buyer’s remorse” over the Bear Stearns deal.  Really!?!

According to Charlie, Dimon et al feel the marks on the Bear Stearns assets were “wrong” ... “overestimated” ... “weren’t conservative enough.”

I’ve been asked to follow up on an article I wrote on March 10, 2008 about commodity prices and the effect that I felt(feel) commodity ETFs have on the underlying commodity.

Please read the whole thing by clicking here. Here is the second half with some key points highlighted:

It was great to see Bloomberg cover this story about Barton Biggs saying we are near a bottom:  Biggs Says U.S. Stocks `Close to Bottom,’ May Rally.

It reminded me of Biggs Talk (as in “to talk big”) from March 14, 2008  Here is the Bloomberg article from back then titled Barton Biggs Expects 1,000-Point Gain in Dow Average.

I’ve said so much about this Fannie and Freddie disaster, so I don’t really feel like adding much more until I see the actual plan (not just rumors about what is going to be in it).

However, I do have a few quick takes:

During the campaign and as late as August 1st, Senator Obama proposed to provide $500 per person or $1000 per family to supposedly compensate America for the burden of high gasoline and home heating oil prices for a 4-month period. That will cost about $75 billion. I know how that makes sense to buy votes for an increasingly socialist America. But of course, it does not make sense for capitalism.

For years I have argued against the concept of a “windfall” or “excessive” profits tax. So I won’t repeat the reasons for my opposition now… just search my blog for “windfall” and read through all my prior articles.

“We, as well as our SWF and central bank counterparts, are reluctant to make additional commitments.” - A line from Bill Gross in his monthly Pimco Investment Outlook.

A little over a month ago, I questioned …Is Pimco Too Big?   After reading his outlook and watching Gross on television today, the answer appears pretty clear.