Now, it doesn’t seem to matter for those that have successfully dodged massacre by focusing on company’s they know and understand. They are cashing in and putting money on sidelines. Save for residue from Great Crash in 1929, that saw DJIA take 20-years to recover, longest bear market has lasted 2.5 years. That is good news, (I guess). The stock market reclaimed 73% of its value within 9 months of Great Crash (okay, it wasn’t so great, but this is "me" generation and it thinks we do everything better than those that came before us) of 1987. With this in mind, maybe market will move to a 180-degree angle and satisfy two elements of history. Matching timeframe of longest bear market, and at same time yielding average amount of ground that has been typical. Maybe a quickening climax to what has been cruel treatment could be answer. But, hold on to your hat, it means Dow has to fall to 8177 before a floor can be put in. The last three trading sessions of week saw Dow off an average of 150-points, on Wednesday, Thursday and Friday. At that rate, we could see index bottom in 7-trading days. That would mean world’s largest equity market, and pride (we still love it deep down inside) of nation could be ready to rebound after fourth of July.

Accountability

Someone has to pay. America has always had a strange relationship with its would-be criminals. They love Bonnie and Clyde, Machine Gun Kelly and more recently John Gotti. Yet seem to loathe Ivan Bosky, Michael Milken and Gordon Gecko. This really goes back to a Robin Hood mentality that it’s okay for underdog to take from rich but not okay for rich to take from people. This is a lesson that Martha Stewart is learning hard way (not to say she’s guilty of anything, but if she is…) with her current stock sale imbroglio. At end of day it really only becomes an inconvenience for those staying at Club Fed. The key is that average person on street needs to feel like there is some fairness in this world. Before getting back into stock market those whose lives are marked with rules, regulations and spending time in traffic court to fight a ticket must see an equal distribution of justice.

Economy

The economy has to continue to grow. It is unreasonable to think that a transition from a recession to a would-be expansion could happen without a few bumps in road. Of course with so many things going against economy that have nothing to do with fundamentals it is hard to figure when coast will be clear. A company like WorldCom says it may have fibbed to tune of $4 billion dollars and confidence in America suffers. That puts additional pressure on dollar, a greater focus on rating agencies to be even more aggressive in their downgrading binge. It causes net outflows in funds. It lowers wealth effect and hampers economy. Yet American economy has an iron will. It will be dinked a few more times, but that is what will make move into expansion that much impressive.

New Thinking

The mindset of quick payoff has to be eliminated. I don’t think one can be a passive investor anymore. In fact, same decisiveness that investors are demanding from system, ratings agencies, brokerage firms, governing bodies and corporations themselves they should apply to their approach at stock market. In a recent Business Week article it was noted that turnover in NYSE issue in 1960 was just 12%, last year it was 94%. That means there isn’t always a lot of time to peruse or hesitate. In some ways it is unfortunate that companies aren’t allowed to evolve or reach their goals over a longer period of time. Yet this is world we now live in and investors have to adjust.

Earnings

Much is made about market still being over valued based on historic price to earnings ratios. This is because companies have no pricing power and are afraid to force issue. Moreover there is still inventory overhang and fact that some industries are too crowed –back to modern day baseball theory. Creative destruction and an improving economy are only things that can make this situation improve. There are other ways to measure worth of a company beyond P/E ratio. However, in order to feed into economy earnings have to be a tributary allow for job creation, research and development spending and an improvement in wealth effect. The most compelling aspect of better earnings is that investors have to believe in sincerity of numbers.