Capitulation?

Prepare yourself for a wild ride today in the financial markets. The pre-opening in the Dow Jones and S&P 500 index markets is down over 5%.

Today, you will see fear and maybe even some panic. Mostly, you'll hear for Bernackes head on a platter. This man will go down in history as a putz, but in my opinion, he inherited many problems from Chairman Greenspan. Greenspan, thought sub-prime loans (they weren't called that back in the day), were a great tool for more Americans to achieve the American dream, home ownership. He also, never grew a backbone. Throughout his term as Fed Chairman, he allowed no pain in the financial markets. Every time there was brush fire (economically), he doused it with easy money. This allowed asset class after asset class to experience it's own speculative bubble, with the investment community knowing Greenspan would bail them out. The financial markets are clamoring for the Fed to lower interest rates by 75 basis points today, which if Greenspan was still the Chairman would be guaranteed. Does Bernacke have the fortitude to tell the market no?

While the wealth destruction that will occur today is very real, it is also very necessary. The seeds of this destruction will sprout into the next sustained recovery. Reality, will move back to the fore-front. Opportunity, albeit in a different form will present itself.

Now, is the time to be a super contrarian, the best buying opportunity in a decade for stocks is just around the corner. Now, I would never recommend someone step in front of a freight train, but, it appears stocks are set to wash-out. Historically, some of the worst bear markets are in the 30% to 35% range. The Dow is already down 15% from it's all-time high, and is scheduled to open over 5% lower on today's opening. To me, that says we're going to bottom sometime relatively soon. A 30% bear market in the Dow Jones would put it in the 10,000 range.

One of the worst things to happen would be for stocks to rally today after a bad opening. It would relieve the pressure, short-term, but, would revive hope. Let it crash IMO.