Much Ado About ...WHAT?!!?
We had a modest volatility day with prices stalling once again at these elevated levels with no real news to move stocks forward as we wind down the quarter and prepare for another outstanding earnings season in a few weeks. It is natural and normal to see some consolidation here and things just looked like another day before summer begins with a lethargic market WHEN....

Bear Stearns announced they were closing two of their mortgage backed hedge funds due to leverage problems. SUDDENLY in the last hour we traded down 140 points on the DOW.

Every Investor would like to (or believes he would like to) be a part of one of the highly leveraged and widely touted hedge funds, but lack the extraordinary amounts of capital required to enter the clubhouse and play with the big boys.

True, these behemoths that trade 20% OF THE STOCK IN THE ENTIRE MARKET EVERY DAY can show past results that are mind boggling to the average investor/trader. WHAT THEY DON'T TELL YOU...is that the three largest hedge funds are down a whopping 44% average for this year alone.

Now these hedge funds don't play by all the strict rules and protections that have been placed on "normal" mutual funds because their investors are wealthy, savvy and know the risks involved and are prepared to take them (Yeah sure). They CAN and DO play fast and loose and it is THEY and not the mom and pop investors that get caught up in the "froth" of the day-to-day markets. Most of us retail market investors are too busy with real life to sit in front of the monitor all day... (even me!!!).

Fact of the matter is, that even if all us "small" investors banded together to form a trading union and voted our stock one way or the other WE COULD ONLY CONTROL 7% OF THE STOCK VOLUME TRADED IN THE MARKETS DAILY! Yet the talking heads would have you believe it is us little guys who are so uninformed and non-professional that we get scared at the smallest bit of bad news or push our greed glands to the limits when we hear Cramer tout the latest hot stock AND RUIN THE MARKETS FOR THE REAL PROS....Believe me...It ain't me (or you). It's the hedge funds acting like scared small investors and they DO have the same fears, anxiety and greed that the little guys are supposed to be guilty.

Just ask yourself, in a market that is now up 23% how can the largest hedgefunds who have all the mainframe computers and Wharton Business School grads pulling down mid 6 figure salaries BE DOWN 44%??

You do have more and easier control of your funds than these jokers do. Just don't get caught up in the short term noise and remember...IT'S THE EARNINGS STUPID!!

One of my Mentoring Students reminded me of a saying by one of the more well heeled of the Ford family clan that I think is most apropos at times like these and I thank him for reminding me.

"Remember that the airplane takes off AGAINST THE WIND, not with it." - Henry Ford
  
I like the breeze in my face,