Well, it's taken some time but 2 of the three major indices are now teetering on the literal precipice. The S&P and Dow have now closed right above the close on that first day we recovered from those awful October lows. And, tech bearishness be-damned, the Nasdaq is *trying* to hang in there like a trooper pleading with its compadres to get some inspiration to see the light ahead....

I am sure all of you are about as tired of this broken record as I am, but I feel compelled to underscore this discordant music score.

Typically, at moments like this, every single person is watching the exact same signals and mileposts. The question on everyone's mind is whether those October lows can hold. It wouldn't surprise me in the least if we get yet another bear rally from here. After all, we just might be on the verge of placing a (some?) bin Laden head on our trophy mantle and that would be enough to give everyone an excuse to buy....especially those poor traders and speculator who lost friends and family on 9/11.

But lest we forget, harken back how not so long ago the bulls and optimists had declared the bear market finally vanquished as we vaulted from those October lows with the same stubborn determination they had when we bounced from the lows the PREVIOUS Fall. These same people are now preaching patience and perseverance. Admirable qualities indeed, but that energy should be applied to *capital preservation* for all but the most intrepid speculators (yours truly has even dabbled with less than stellar results!). I need not run down the long list of risks we now face, but hopefully we all understand just how bleak and dire things really are and how much worse they could get. My own greatest angst is that I watch this current administration pursue evil around the world like a bunch of Christian Crusaders while the entire global economy slowly unravels under our very feet. I am always reminded that God favors no nation and that history has ALWAYS in the end humbled the arrogant, and, yes, the imperialist, amongst us. Let us *pray* that we are somehow not on a course that pits us against the rest of the world in some kind of cataclysmic political showdown which we look back upon as America's tragic peak. Let us *pray* that somehow we are embarking on just causes that will somehow make the world safe from dangers unseen and unknown. I realize this sounds awkwardly apocalyptic, but it sure parallels the near-apocalyptic rhetoric that we hear constantly from Washington to urge us to resolve and to determine to get our way on the world stage.

Make no mistake about it folks...we are witnessing steady and certain deterioration. It has been so slow that it is easy to forget that recessions are painful exercises in economic malaise. It has been so slow it is hard to fathom that things could actually get worse! (Don't forget the parable of the boiling frog!) As I stated in a past missive, only dumb luck can save us from whatever ill fate is supposed to finally cure us of the 90s bubble-mania.

I am not raising some kind of financial orange or red-alert to urge you to cover your cash-laden mattress in plastic sheeting and seal it with duct tape, but, as always, I am asking you to stay aware of the real risks that lay about and have proper financial emergency plans in place. Who knows, we just might make it out of this, but stop for a second and think through what it might take to turn this ship around....a victory in Iraq? A relieved citizenry that embraces democracy and spreads freedom and capitalist wonders throughout the Middle East? The opening of new markets and opportunities for downtrodden businesses to finally make a profit (oil-barrons unite!)? I don't think so. Perhaps some dividend tax cuts will get rich and well-to-do people spending profusely and the average Jane and Joe spending even more money they don't have and businesses investing in capacity that they don't need? Again, I don't think so. When someone comes up with a plausible scenario, I would LOVE to hear it! I will publish it immediately! :)

I myself am clinging to the hope, yes *hope*, that the worst ahead is a stagnant economy that stumbles and bumbles along but does not cause much more harm to any more people than it already has. It is the remaining thinning strand that actually prevents me from turning the rest of my portfolio into cash.

It is truly ironic. I fashion myself a contrarian. It is exactly at these darkest moments when hope and potential seem to be on their last ebb and flow that you bet against the wind because the market and the economy *always* come back. The problem is that at these moments the assets you want to buy are ALSO supposed to be priced accordingly. We are far from it. The best calculations I have seen show that the market is fairly-valued. Fairly-valued?!?! Wow. Hard to imagine after three years of brutal losses we are not far below fair value, but it is also hard to believe that with all the risks in the global economy right now that we are even that high.

Again, do not be blind to potential opportunities out there, do not stubbornly refuse to believe that somehow things could get better, but, in the end, BE CAREFUL out there, people!