Serials by Kellogg

Congratulations, you are a winner. You have plumbed the depths of market hysteria—from mania to panic—without losing your composure as a true investor.

Tee shirts with decals should be ordered for all except those myopic dolts on CNBC who turned the work of second-rate Wall Street analysts into an entertainment business. A thrill-ride to excite the unwary into believing the pitchman for a few ad dollars more.

First you saw a classic mania with the NASDAQ Index and its so-called technology stocks soaring up nearly 80% in a little over three months. You heeded our warnings while the pundits preached the sky is the limit—there’s no end in sight for earnings. But their vision and timing were blinded by the thrill of telling.

After the bubble burst, they repented with a new siren song—no visible earnings in sight. The ensuing malaise fed on itself to panic weak hands into a general sell-off, dropping the S&P 500 Index over 20% in less than two months, like an equinox tide racing out the Bay of Fundy.

It used to take us years to experience such speculative and bear markets. You did it in just twelve short months. Mercifully such extreme events are usually short-lived but what remains to be seen is, whether any lessons were learned by those responsible.

Was Merrill Lynch truly duped by the foolishness of its own analysts, their naivete about what lies around the corner—for those tech stocks Merrill and its friends were promoting? Have the weak found courage to manage rather than react? That’s why IFM is independent.

Those of us schooled in the arts of security analysis—and it is more art than science—are expected to anticipate the opportunity of consequences as the economy lumbers forward on a meandering path of its own choosing.

Its own choosing? Maybe you thought Alan Greenspan or Bill Clinton or some other luminary-of-the-day was responsible. Forget it, they are all merely entertainers in their own fashion. For the most part, the allegedly omnipotent Federal Reserve Bank of Alan Greenspan can only react to what has already happened and often as futilely as pushing up on a string.

In years past, we needed good "road" sense like a race driver to anticipate what lies around the corner and "stealth" like a cat burglar to trade the market again and again without it learning to anticipate our arrival. We measured success in years. Today’s players thrash about with great impatience and fanfare for the moment.

Now we need counter-intelligence to see past their ulterior motives and lack of craftsmanship. With hoards of nouveau professionals sweeping in from their B-school havens a competitive market has become combative with adrenaline junkies ruling the day—but not the decades.

You have seen how our decades-strong perspective beats the junkies and media groupies over time. Patience, perseverance, perspective, perception and perspiration are the keys to successful investing, not potluck and potholes.

To be continued...