This morning we have had a rather interesting picture take place.  We have had Lehman Brothers declare bankruptcy.  That is on the heels of Bear Stearns folding and having to be bought and being forced to be purchased by J P Morgan.  At the same time this morning, Merrill Lynch is being purchased by Bank of America.  These are stand alone brokerage firms that have been around for 100 plus years.  It is the demise of an era and I must say, it is with extreme delight that I see this taking place.

The aforementioned firms thrived and made absurd profits and paid star traders 20 to 30 million dollars a year.   Why did they do this and how did they do it?  They did this by taking unfair advantage of an uninformed public, using the public's money and leveraging that money for their own gain and it worked for many, many years.  We also have AIG Insurance doing the same thing.  It is in dire straits this morning.   The point is that the public was the one who was made to suffer in all previous market corrections.  It was the public that lost large amounts of money.  In 1929, 1974, and 1987, it was the public that was the loser.  You did not hear anything about the Wall Street firms losing money, because they didn't. 

In a display of cupidity and avarice, they began to feel that they were bullet-proof and invisible and were the "masters of the universe" which meant that they could take whatever risk they felt they wanted to, and then reap the fees that were unconscionable and everything would be just fine.  Well, it finally came to an end and at this time they were not prepared for the end and suffered the consequences and the ultimate demise of these firms. Frankly, I think the financial world is a lot better off without them because they did not add anything, but were parasites on the financial well-being of this nation. 

However, what it is doing is uncovering some very interesting purchasing prices as bargains are beginning to show up.  Now whether or not they will stay there, is not clear;  I do not think they will.  This is not a day to panic.  This is a day to be more of an observer.  I do not think the lows for the day are going to hold.  It appears that we will get a rather impressive rally out of here, out of this giant oversold situation that developed early on from the total uninformed panicking and running out of the room with their hair on fire.

It will be necessary to be patient and observant here, and at this point I will begin to employ some of the reserves that I have held back in the past.  I have been criticized for having too much cash, but at this point I think we will begin to have opportunities for the effective use of that cash because prices are coming in now where I think they are bargains.  We will just have to see in the next couple of days, but this might be a God sent gift to us by these prices coming down.

Be patient.  This is the beginning, not the end.

At one time in my career I worked for Lehman Brothers, and the following is an actual episode during my time there.

The office manager at that time confronted me with a statement that the firm was not happy with me because I was allowing my clients to make too much money, "you apparently do not understand that the firm is supposed to make more money than the client." I argued the point, but to no avail and shortly thereafter I resigned and joined another firm.  That is not the exception, but the rule.  That is how this was done for the past 150 years.  The public has become far more educated and sophisticated through the years and finally, karma has exerted itself in its action of punishing those who deserve to be punished.  You had actions by these and other Wall Street firms that were taking unfair advantage of the less than sophisticated public, not exposing their own money in the past but the public's money and with such bravado, and with such outsized ridiculous returns for themselves I might add, that it fed upon itself.

What does this mean for us, what does this mean for today?  It means DO NOT PANIC.  Use the excuse of these ridiculous prices to accumulate high quality investments at highly affordable or bargain prices.  There are numerous situations that I am looking into at this moment, and I will be making commitments in the next few days, because this is the kind of thing that has not taken place for a long time. 

It seems that the public is reacting accordingly as I speak.  We were down 350 points, and are now down 229.  The investment shoe has been placed on the other foot and now the public is having the opportunity to invest money at these discounted prices that are being sold by the aforementioned public traders which does my heart good. 

If you would like to know specific ideas that I am looking into, you are free to call.  Otherwise, have a wonderful day, and know that we are using this event to our advantage. 

Thank you for reading, Jack.