More than fifty years ago, LaVern Baker & The Gliders, brought Jim Dandy into the fray to lasso runaway horses, dry the tears in little girls' eyes, and to save special mermaids from the hooks of villainous fishermen.

(Black Oak Arkansas' rendition on YouTube will help you understand what your parents and grandparents survived.) Go, Jim Dandy! Go, Jim Dandy!

Every fall, especially in opportunity rich markets like this, I encourage investors to think about some year-end strategies that make the final calendar quarter a special time in all markets. Several forces are at work, all of which have links to conventional Wall Street wisdom; none of which promote good long-term investment decision-making.

This year, we have the added excitement of anticipating a new, perhaps economically too liberal, administration taking over with an already implanted, and demonstrably inept, congress. The markets are in a truly unprecedented state of "uncertainty overload". What's an investor to do--- or not to do?

Every new controversy demands a look at similar situations of the past. Just what is a bailout anyway? In the early 80's, Lee Iacocca arranged a government loan and tax concessions to bring Chrysler Corporation back from the brink of bankruptcy -- during the Carter Administration, to save you a Google.

The economic domino effect of a major corporate death was clear, and Congress acted wisely when it saved this American icon from extinction--- the loans were repaid. But was it poor management or shortsighted government that caused the problem? Politicians massaged and empowered the labor unions, implemented minimum wage legislation, and protected the steel industry from foreign competition.

Both presidential candidates want to crucify SEC Chairman Cox for failing to control our creative financial institutions. But rumor has it that Congress specifically excluded the devilish derivatives from SEC purview. Let's fire the right bunch of "poips" for a change!

Scary markets are brought about by many factors - some normal, and some not so normal. It's often helpful to look backwards before getting too paranoid about the present. The S & L crisis of the early 80s might be an appropriate starting point.

Looking for good news in today's markets is like searching for the proverbial needle in a haystack. Needless to say, practically all investment grade equities and nearly all closed end funds that specialize in providing regular recurring monthly income have been reduced in market value by this prolonged correction. The quake has spread in all directions from its financial epicenter, and the mounting doom and gloom has taken its toll on even the most rational investment decision makers. Try to keep in mind that the purpose of income investing is the income that your portfolio produces not an increase in the securities' market values.

So here's the good news (and for anyone with a 40% or higher income asset allocation, or an income portfolio being used for living expenses), it really is very good news. Base income levels, from the beginning of the stock market correction in June '07 until mid-July '08, have barely changed at all. In fact, they have probably risen in properly asset allocated portfolios. I have examined the regular recurring monthly income distributed by 56 taxable income CEFs and 61 tax-free income CEFs, and the conclusions are pretty remarkable.

"The time has come the walrus said, to talk of many things": Of corrections--portfolios--- and window dressing--- of market cycles--- wizards--- and reality.

Quarterly portfolio window dressing is one of many immortal Jabberwocky-like creatures that roam the granite canyons of the Manhattan triangle, sending inappropriate signals to unwary investors and media spokespersons.  Many of you, like the unsuspecting young oysters in the Lewis Carroll classic, are responding to the daily news nonsense with fear instead of embracing the new opportunities that are surely right there, cloaked, just beyond your short-term vision field.

The caller seemed surprised that I had never heard about Compound
Stock Earnings Programs, or CSEs. "People are earning three to six
percent per month with little or no risk", she continued, "I'm
thinking of attending a seminar." A wise man once said: "If it sounds
too good to be true, it probably is", but this sure is a creative
euphemism for what has to be a rather complicated options strategy.

The buyer of a "call" option obtains the right to purchase a specified
quantity of a security from the seller of the option, at a stated
"strike price", and at any time on or before the contract expiration
date. When the option seller owns the security, it is called a
"covered" call. The CSE hucksters don't deny that their magic cash
flow system is based on selling "covered" call options, but the "come
on" includes a laundry list of misinformation, partial truths, and
inaccuracies about the stock market and investing.

Always buy too soon--- because no one will tell you either when the rally will start or, more importantly, how long it will last. Of course those are the two things you want to know, but all you really have to go on is the experience of the past. This is not going to be a technical analysis of a series of numbers or chart formations that have predictive capabilities. Instead, it is intended to be a mild sedative to calm your collective fears and to allow for a relaxed analysis of the corrections of the past. You have to prepare yourself for the rally that is surely coming, and it may just arrive sooner than you think--- today, even.

Yesterday's classic e-mail question wondered: "Is this ever going to end?" The reference was to the eleven-month correction playing out concurrently in both the investment grade value stock [IGVS] and the income securities markets--- the anxiety was cloaking the monitor screen in doom and gloom. Most of you would be surprised at how frequently the current scenario has repeated itself during the last 80 years. Quite typically, a new set of abuses has been identified as the cause of the problem, and it is likely that a new set of regulations will be enacted for monitoring by new legions of enforcers.

Uno. Asset Allocation is an investment planning tool, not an investment strategy... few investment professionals understand the distinction. Investment strategies are used to implement the asset allocation formula that investment planning produces. Many investors incorrectly believe that investment planning and financial planning are one and the same. Financial planning is the broader concept, one that involves such non-investment considerations as: Wills and Estates, insurances, budgeting, trusts, etc. Investment Planning takes place within the Trusts, Endowments, IRAs, and other Brokerage Accounts that come into existence as a result of, or without, Financial Planning.

Zwei. Asset Allocation is a planning tool that allows the investor to structure his or her investment portfolios in a manner most likely to accomplish the goals established for each portfolio and for the investment program as a whole. It is the process of planning how the portfolio is to be divided between the two broad classes of investment securities: Equities and Income. Security sub-classes have little relevance, and should be avoided. K.I.S.S.

Here we are, in the midst of a presidential campaign, trying to select a new President for what is still the most economically powerful nation on Earth. The candidates are kissing all the babies they can get their palms on and smiling until their cheek muscles ache; but will they be able to produce any of the changes they talk about? Do we really want them to?

90% of all Americans are investors and, as such, there are issues that we need to hear about from the man or woman who would be king. None of our could-be leaders are addressing the issues that would allow us to achieve our financial goals. What we all want is to keep more of what we make, and then to spend it as we see fit. It's not clear how the candidates intend to help us. Is investor enemy number one a tax, a budding foreign economy, a scarce commodity, the powerful institutions, lobbyists, index funds, or the politicians themselves?

Many investors are beginning to think that income investing is every bit as risky as equity investing, but nothing has really changed in the relationship between these two basic building blocks of corporate finance. What has changed in recent years is the nature of the derivative products created by the wizards of Wall Street to deliver both forms of securities to investors. The most popular form of equity delivery today is the three-levels-of-speculation Index Fund. New ETFs are birthed every day and, in total, have become as common as common stocks. Have you noticed that regulators always strive to prevent financial disasters from happening... again?

But, in the meantime, the forever-sacred bond market has become the hysteria arena of the moment in media, country clubs, neighborhood pubs, and retirement villages. Does my nest egg have a crack in it? No, not really.

The parade of promises is marching down Main Street. For too many months to come, politicians of all descriptions, parties, and ideologies will be courting our votes... they have the cure for all that is wrong in the world, they tell us. With crystal clear hindsight, every candidate criticizes the decisions of every incumbent, from the Town Council of Podunk to The Presidency itself. You've heard it all before; it never changes. But we all know that little will be accomplished. Ten years from now, we'll be grumbling about the same things that bothered us ten years ago! But we listen to (and sometimes even believe) the same garbage, campaign after campaign. Aren't you tired of this cycle of frustration? If you thought you could make a difference, would you try?

As investors, we represent the single biggest voter block in the country. Of the 250 million (+ or -) voting age Americans, no less than 75% have some form of investment portfolio plus an interest in the illusory Social Security Trust Fund. Investors have the power to elect the next president, change the tax code, fix Social Security, and strengthen the economy. We have the power to produce significant changes in our society, but we need to start sending the right message to politicians... collectively, constructively, and quickly. In this rapidly "flattening" world, our non-leaders (in both parties) are unwittingly making us less competitive globally, more protectionist at home, and less attractive to foreign investment than ever before. It's no wonder that we export more rhetoric than we do goods and services...

Whatever happened to the stock market cycle; the interest rate cycle; Baby Jane? How did Wall Street get away with pushing these facts of financial life down the basement stairs? Most investors, I'm beginning to believe, and all financial advisors, media representatives, and market gurus have abandoned these fascinating curves for the comfort of a straight-edged twelve-month playing field... simple, yes; realistic, not. I have to wonder if things would be different with a more investor-friendly tax-code, but that would be far less lucrative for the wizards.

Investing with a calendar year focus has no basis in the realities of finance, business, or economics... isn't it obvious that the stock and bond markets are far more closely related to the business cycle than to the Earth's around the sun? Investopedia reports that during the last sixty years, most business cycles have lasted three to five years from peak-to-peak. The stock market cycle (in terms of the S&P 500 Average) is the period of time between the two latest highs of that average which are separated by at least a 15% decline in the average. The second high needs only to be 15% above the nadir; it doesn't have to represent a new all time high [ATH]. Interest rates (based on the 10 Year Treasury Bond) seem to cycle in the two to five year range and are much more closely related to business or economic cycles than they are to the stock market cycle. Confused?

Sweet November... well, not really: the war lingers on for purposes unknown to most and oil prices continue to rise. Credit woes dominate the financial headlines, and value stocks seem intent on extending their correction into a seventh month. Investors want a stronger dollar while lower interest rates (and lower taxes) are clearly more beneficial. Neither political party has a candidate that supports real tax reform for both investors and corporate job creators, nor has the counter productive United States Regulation Industry stopped growing faster than most world economies. In terms of issue breadth alone, November is becoming the worst month (or the best buying opportunity) since July of 2002, and possibly since October of 1987. Just who makes this good/bad determination anyway, the Wall Street institutions, the media, investment letter writers? Why are rallies considered good and corrections bad? Will we remember 2007 as the year of the Grinch or will the leaves and the market stop falling in favor of a Santa Clause rally? Only the phantom knows for sure.