Memo to Congress: Thanks for Nothing

I hope those Congressmen (and women) are happy that they voted down the TARP plan today and caused the market to lose $1 trillion in market value. Do you think when the economy goes into recession and their constituents lose their jobs that they will be happy that their representative voted "No" on a plan that might have stabilized things? (Here is the list of how your reps voted)

The Dow lost -777 points today, the largest on record. But that headline that you will see all over the media is very misleading since in percentage terms the Dow fell -6.98%. That's a hefty one-day haircut, but it pales in comparison with the Crash of 1987, when the Dow plummeted -22% in one-day.

The VIX, or the fear index, spiked some +35% to 48.4 today, which I believe is its highest reading on record. Someone emailed me some stats that the last 4 times the VIX closed above 40, the S&P was +20% higher looking a month out. Let's hope for a recurrance.

Despair is rampant on the Street, but that is how it always is at bear market bottoms. I remember in 2002 having a tough time putting together any list of reasons why the market would rise again. But I suspect we will look back on this period in the same way.

I don't know when the exact bottom will hit, but I am fairly confident that we will look back on these prices a few years from now and ask ourselves why we were being more aggressive taking advantage of the fire sale.

Just go back and look at the low prices hit in October 2002 and you can see how much money you could have made. But you had to buy when your stomach was in knots, and your neighbor called you an idiot for buying.

That said, I have not put any cash to work yet. I want to see some signs of stabilization. Bottom fishing can be dangerous, and I am happy I have not been tempted to jump in these last few weeks.

Happy New Year to all those who will be celebrating. I will be here sweating it out for you.

long SDS