Investing is the process of buying the most future earnings at the lowest price possible, adjusted for risk and factoring in time. – Joshua A. KennonWe don’t care what an investment does in the short-term. In fact, we plan on holding almost all of our positions for at least five years. As a private firm, we don’t have to worry about outside pressure if we bought a cheap stock that happens to get cheaper because other, less experienced investors are caught in the grips of terrified panic. In fact, it is no exaggeration to say that if we woke up tomorrow and the Dow Jones Industrial Average had dropped 50%, it would cause us no great hardship.

Part of this is the result of our business model. Our investments are supported by a stable of high-quality, cash generating private companies that do everything from sell varsity letterman jackets to fine jewelry. These businesses boast strong balance sheets, little or no debt, and high returns on equity, enabling us to use the cash flows to expand into other opportunities. We believe that if we act with discipline, focus on controlling costs, and reinvest all of our earnings, the power of compounding will do the heavy lifting.

The e-commerce sites, of course, have been hosted on top-of-the-line secure servers throughout the world since the earliest days, some in partnership with Yahoo’s merchant solutions business and others with competitors depending upon the technology needs of the particular site (Kennon Home Accessories, for instance, uses a PHP-driven database platform built on a Network Solutions backbone with most of the inventory management handled through regular CSV uploads, whereas the Mount Olympus Awards site is built on hand coded Dreamweaver html pages with call tags that reference a product inventory sheet in Yahoo’s catalog).  The digital content distribution business is built on secure web hosting packages with redundant backups managed by third-party server farms.  What I’m talking about here is the system that we use at headquarters so when I want to drop an SEC filing on Aaron’s desktop with my annotations and have him get back to me on a particular investment idea – the actual machine that I pass each morning when I go get my Douwe Egberts coffee.

I’m beginning to wonder – at what point does it make sense to switch to a Mac OS server configuration? I’ve never been exposed to one and, to be honest, I’m not entirely sure how they work.  The research is going to begin this week.  We’re probably not going to do anything this year, but as we grow, the idea of having rows of 24″ iMacs tied into a server we control (and can use to restrict certain activities) is highly appealing, especially when we begin hiring CSV product coders who will be sitting in front of the screen all day before shipping product feeds and search marketing bids up to our administrative accounts.

I know our manufacturing company, Chenille Appeal, LLC has a Microsoft-based server that sits in a room in the middle of its production factory and that it’s used to control the individual terminals throughout the building.  Maybe I’ll try to make my way over there and start asking questions.  Better yet, I’ll just find some firm that specializes in this.  I want to stick to the investments, launching new businesses, and enjoying my system (both Aaron and I work on Mac Pros with two (2) High Definition 30″ Apple Cinema monitors and at home, use a 17″ MacBook Pro).

This whole conversation does make me question one thing: At what point do we pull our ecommerce activities in-house, spend a couple million dollars, and build our own secure server farm with a custom-designed platform?  I don’t know if I’ll ever see the need for that until we go public because the companies exist to generate investment cash for me to deploy and anything requiring a project that large would a distraction from doing what we do best – outselling our competitors and keeping our cost structure ruthlessly low.

Assume you own a beverage stand that sells lemonade in the summer and hot cocoa in the winter.  This small business earns 10% on assets.  You decide you have better things to do than work the counter, so you turn it over to a professional manager.  The day you handed over the keys, your beverage business had $10,000 in capital (okay, it’s a really nice stand) and generated $1,000 in profit.

The next year, you come back and the stand has earned exactly what was expected. You decide to reinvest the $1,000 profit back into expansion so your business now has $11,000 in assets.  The next year, when you come back to check on performance, logic tells us that your company should have made $1,100 in profit because you increased the money at work ($11,000 assets x 10% return on assets = $1,100).  Should your manager be able to boast of record profits?  Should he or she be rewarded and get a bigger salary or stock options because they increased earnings 10% when you, by reinvesting profits, gave him 10% more capital to work with at the start of the year?  Of course not.  You were the one that gave up what you could have spent in order to expand, why should they be rewarded for doing a mediocre job?  A great manager is one that increases a firm’s return on assets without the use of leverage or increasing risk.  Think of someone like Tony Nicely at GEICO who has generated breathtaking gains in productivity per employee.

Taking the illustration one step further, let’s assume that the next year, you come back to find that your manager borrowed $15,000 to expand even more rapidly, resulting in $1,000 interest expense and total assets of $27,600 ($11,000 starting assets + $1,100 return on original assets + $15,000 assets paid for by borrowed money + $1,500 return on borrowed money – $1,000 interest expense).  In this case, profits would skyrocket to $1,600 from $1,100, representing a gain of approximately 45.5% in one year.  Yet, to generate that return, you had to increase assets by nearly 151%, substantially increasing your risk in the event of a bad economy or hitting an unexpected bump in the road.

The point is, that increasing profits 45.5% in the scenario I just described requires no managerial talent whatsoever.  None.  Zero.  It is nothing more than retaining money from the owners, who could have used it to buy things they wanted, donate to charity, or fund other projects, and piling on risk by increasing debt.  It’s financial engineering.  That’s not to say having an optimal debt structure can’t be a brilliant move; it can.  It’s just that most investors are blinded by a management team that somehow magically reports bar charts marching toward the sky without taking the time to examine that actual return those same managers are earning on money that was kept from the owners by retaining capital.

The lesson: Always examine 1.) the total capital at work in a business, 2.) how the capital base changed throughout the year, and 3.) the return management is earning on total capital at work, especially when compared to competitors in the same industry.

I’ve been reading all I can about a firm called the Storyville Coffee Company. The quality of graphics, the seamlessness of the design, the production value of their on-site commercials and informational videos, the aesthetic that went into creating their headquarters, and the obvious passion for the product are infectious. When we talk about quality businesses and management teams, this is exactly what we mean. You cannot teach someone to have an eye for detail this meticulous or caring. From the doormats to the coffee roaster itself, the company’s simple, yet brilliant, logo is displayed. It is one of the few cases where mere marketing has been elevated to art.

One of the things that has been in development here at Kennon Green Enterprises for the past six months is a luxury fragrance division that will create and distribute bath, body, and home scented products to high-end stores in the United States. Right now, we are still in the formulation phase when various ingredients are being tested and the product lines discussed. When I see the purity of design that went into the Storyville brand, I’m reminded why I love business. When we take this product to market in two years, our standards must be as high. Otherwise, I don’t want to be in the industry. This isn’t just about money – we have plenty of that (although we’re always working to generate more). It’s about creating something that is beautiful in its own right.

When that ideal is achieved, it goes beyond a rational response. A great brand makes you feel something. It makes you instinctively want to protect it if you feel that it is being threatened. Instead of becoming a customer, you become an advocate; a “protector” of the brand. (This, by the way, was the phenomenon that was behind the New Coke debacle several decades ago. The Coca-Cola management team failed to realize that they were entrusted with a global institution, not just a brand.) Very few companies or managers achieve it and, yet, Storyville made me feel that way within two minutes of visiting the site.

The company’s niche is fresh coffee, blended in a private reserve with beans from three continents, delivered on a subscription model to ensure that you get the absolute best quality humanly possible when brewing the perfect cup.  The company offers only two blends, prologue and epilogue, the former being the regular coffee and the latter, a Swiss Water Process decaffeinated version.

Storyville Coffee Photo Gallery

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An Example of Buying Call Options Using General Electric

In our example, I’ll choose General Electric because it’s one of the largest companies in world.  Again, this is not a recommendation; I am merely selecting a massive multi-billion dollar conglomerate to make the illustration easier.

Take a look at a 10 years chart for GE’s common stock (click the image to enlarge):

Before the meltdown, GE hadn’t traded below $30 per share for any considerable amount of time.  In fact, the lowest it appears to have gotten is $23+ back in 2003.  Unlike other companies in the meltdown, General Electric maintains that they have the resources to rebuild internally and expect to be out of the grips of the credit crisis within two years according to recent comments by CEO Jeffrey Immelt.  The stock price currently stands at $13.39 per share.

Let’s say you had allocated some money for an investment in GE.  If you were to buy the stock outright, you could purchase 4,000 shares for $53,560.  If the stock goes back up to $25, your position would be worth $100,000.  If it goes back up to $30, it would have a market value of $120,000.  If it goes back up to $40, your stock would be worth $160,000.  Along the way, you will collect some dividend income, as well.  This is certainly a great buy if you believe that the company is undervalued and you are extremely bullish on the stock.

Buying Call Options or LEAP Options Instead of the Stock

If you were willing to take some substantial risk, however, you could buy a special type of call option on GE known as a LEAP (which is merely an acronym for Long-Term Equity Anticipation Securities).  For greater risk, you can get a much higher payoff should GE’s stock increase in price, as you believe it will.

As of this moment, you can buy the right to acquire General Electric stock at $15.00 per share any time between now at January 22^nd, 2011 (which is $1.61 higher than the current stock price).  That is 606 days in the future.  In exchange for buying these call contracts, you have to pay the person who created the contract $2.31 per share in premiums.  In other words, for the same $53,560+/- investment, instead of buying 4,000 shares of General Electric, you could buy 232 call option contracts on GE stock with a $15.00 strike price expiring on January 22^nd, 2011.  For this right, you agree to pay $2.31 per share in premiums.

In other words, by buying call options you now have the legally enforceable right to buy 23,200 shares of General Electric (remember – each call contract covers 100 shares so 232 contracts would be 232 x 100 shares = 23,200 shares total) at $15 per share.  You have this right between now and January 22^nd, 2011.  You paid $2.31 per share, or $53,592.  So, you have the same amount of money invested that you would have if you’d just bought the 4,000 shares of GE outright.

Here’s how the transaction would look:

When (if) General Electric hits $15.00 per share, you have the right to exercise your options.  However, since you paid $2.31 per share for the contract, your “break-even point” is $17.31 ($15.00 strike + $2.31 premium = $17.31 breakeven).  That is, if General Electric trades at $17.31 in the next 606 days, your options will be at breakeven.  You could exercise the contract and get out of them without losing any money, receiving your entire $53,592 investment back and washing your hands of the whole deal.

Anything above that is where you make your money.  For instance, if GE were to go to $25, you would be “in the money” by $10.  That is, the stock is at $25 on the New York Stock Exchange, but you have the right to buy it at $15 because of your calls.  You could exercise your contracts, buying the stock at $15 and turning around, immediately selling them at $25, pocketing the $10 difference.  If you did this on all 232 contracts, or the 23,200 shares they controlled, you would have $232,000 when the transaction closed.  You originally invested $53,592 so $178,408 of this was profit.  Compare that to the $100,000 your position would be worth if you had just bought the stock and watched it go to $25 per share.  In that case, your profit was $46,440 and you got your original investment of $53,560 back.

The bottom line: If you’re right, and the stock goes to $25, your money grows to $232,000 through the options versus $100,000 through the stock.  You end up with an extra $132,000 on the same price movement in General Electric.

This disparity is extreme the higher the stock moves.  If GE had gone to $40, your position would have been worth $580,000 instead of $160,000 by buying the shares outright – a difference of $420,000!

Of course, there is no such thing as a free lunch.  The greater return is the result of higher risk and this is true when you buy call options.  If General Electric never exceeded $15 per share, and all 606 trading days passed, those options would expire worthless.  You would lose the entire $53,592 investment.  It would go to $0 because the contracts expired. That’s why this strategy is not appropriate for most investors.  In this case, the question would be: Do you believe the global economy will have recovered 1.66 years from now by January 2011 and, if so, do you think that will extend to the stock price of General Electric?  If you are willing to back that conviction with your money, the payoff can be enormous – in this case, turning $53,592 into anywhere from $232,000 at $25 per share for GE to $580,000 at $40 per share for GE.

We have a highly selected, extremely scrutinized collection of LEAP call options on stocks that we think are undervalued.  We are fully aware, and willing, to take the risk that if the world were to fall off a cliff, or experience another September 11^th, they may expire worthless.  However, given the risk-reward tradeoff, the amount of money we have working for us in more conservative strategies, and our collection of growing Internet businesses, we are willing to take this risk.  If they work out, we will make hundreds of thousands of dollars in profit.  If they don’t, we will lose money.  We acknowledge, and accept, that.  It’s a relatively small part of our overall strategy with the potential for big gains.

Right now, we could purchase 6,000 shares of U.S. Bancorp for $19 per share for a total investment of $114,000.  We think that long-term, the bank is worth substantially more; it has a strong balance sheet, management ordinarily receives much more money from dividend income than they did salaries and bonuses because they own a lot of stock (giving them a powerful incentive to start paying the dividend again as soon as possible after it was cut during the meltdown), and they have raised money to repay the United States Government TARP money.  We think that over the next 3 to 5 years, it could get back to $30 to $40 per share, which would generate a profit between $66,000 and $126,000 on our position.

However, we know that in the short-term, the stock could fall and experience substantial paper losses.  It isn’t unusual for the banks to fluctuate 20% to 30% in a week.  We are fine with that – we like the underlying business and have the financial capacity to hold it if it does decrease in price.  To help generate income from this holding, we enter into a special type of strategy that results in us writing call options against our stock.  This strategy is often called selling covered calls.

The Mechanics of Selling Covered Calls

With a large enough portfolio, it's possible to generate tens of thousands of dollars per year in cash by selling covered calls on stocks you already own. In essence, you are being paid today for giving up the potential upside tomorrow.

Here’s how it works: After we bought the stock, we go to the Chicago Board of Trade and agree to write (or “sell”) call contract to other investors.  Each call contract covers 100 shares of U.S. Bancorp stock.  These contracts give whoever buys them the right to buy our stock in USB at $19 per share between now and Friday, June 19^th, 2009.  That is only 25 days in the future.  They can exercise their right anytime they choose until that date, at which point the contract expires and is worthless.

In exchange for buying these contracts that we have created, they pay us an insurance premium of $1.10 per share.  For all 6,000 shares, that works out to $6,600.  This money is deposited into our brokerage account immediately and it is ours forever, no matter what happens.  They can never get it back or get a refund.

The 3 Possible Outcomes for Our Selling Covered Calls Position

There are three possible outcomes for our covered calls, depending upon what the stock market does.  They are:

• Possibility 1 – The Stock Stays the Same Price: The stock remains the same price ($19) for the next 25 trading days until June 19^th, 2009 and the options are never exercised, expiring worthless.  (After all – why would the people bother to exercise the contract if they can buy the stock for the same price as they can on the New York Stock Exchange?)  In this case, we continue to own our 6,000 shares that cost us $114,000 but we also have the $6,600 in cash we were paid for the contracts that no longer exist.  In effect, our net cost was $107,400, or $17.90 per share.  Our cost basis was lowered so if the stock falls to $17.90 from $19.00, we are still at breakeven because of the profit on the contracts.  Thus, in the event of a further market crash, we have an additional cushion protecting us.  The day after the contracts expire, we can simply write new ones if we want and earn an additional round of insurance premiums, making even more profit and lowering our cost basis further.

• Possibility 2 – The Stock Price Falls: If the stock price falls to, say, $15.00 per share, then the contracts will be never be exercised (again – why would the owners buy our U.S. Bancorp stock at $19.00 per share when they can just go on the New York Stock Exchange and buy them for $15.00?).  We still have the $6,600 insurance profit and our cost basis on the stock was lowered to $17.90 so our total paper loss currently stands at $2.90 per share ($17.90 adjusted cost basis – $15.00 market value = $2.90 paper loss).  Still, this paper loss of $17,400 ($2.90 per share paper loss x 6,000 shares) is still less than we would have had!  Without the contracts, remember, our cost basis would have been $19.00 per share – not $17.90.  Thus, we would have had paper losses of $24,000.  The contracts we wrote provided us with income that gave us a bigger cushion for when the market fell.  We were better off than we would have been had we just bought the stock and held it. The day after the contracts expire, we can simply write new ones if we want and earn an additional round of insurance premiums, making even more profit and lowering our cost basis further.

• Possibility 3 – The Stock Price Increase: Imagine the banking industry skyrockets and U.S. Bancorp stock goes to $25 a week from now.  Had we just owned the stock and not written these contracts, our position would be worth $150,000 for a gain of $36,000 or $6.00 per share.  We wrote those contracts, however, so the owners are going to force us to sell our stock at $19.00 per share.  (They then take the stock and sell it at $25.00 pocketing the difference between $25.00 and $19.00, or $6.00, less their $1.10 insurance premium they paid us for a profit of $4.90 for every $1.10 they invested so they made out really, really well.)  That means that we bought our stock for $19.00 per share (6,000 shares x $19.00 = $114,000 total) and sold our stock for $19.00 per share (6,000 shares x $19.00 = $114,000) so we broke even on the actual stock.  Remember, though, that we get to keep the insurance money!  That means we $6,600 in cash that is still sitting in our account.  That works out to a 5.789% return for only 25 days ($6,600 profit on insurance contracts divided by $114,000 total capital invested = 5.789% return)!  To put that in perspective, on an annualized basis, it’s like earning 84.5194% per year on your money at a time when you’re lucky to get 1% parking it in the bank.  Given that level of return, we don’t care that we gave up the potential for $36,000 in profit because we had better odds and still made a huge percentage gain.  We take our money and search for the next opportunity.

In other words, we look at it this way: If the stock goes down, we have protection in the form of a lower cost basis.  If the stock remains the same, we have no paper losses and earned a 5.789% return in only 25 days, which works out to 84.5+% per year if you annualize it.  If the stock goes up, we left some big profits on the table but, again, we earned a huge return so why would we complain?  In exchange for giving up the potential for the stock to skyrocket, we locked in a guaranteed return now.

These Call Option Prices Probably Won’t Last Long

The pricing on the bank options cannot exist like this for very long – my guess is perhaps a year at the most.  That’s why we’re doing as much as we can because we don’t believe it will last.  Right now, the markets are driven by the conflicting fear of watching everything plummet or missing out on a huge gain when the economy recovers.  That’s why you can earn such high insurance premiums on contracts.  Between all of our accounts and companies, we’ve made tens of thousands of dollars doing this since March of 2009 by dedicating a portion of our portfolio to the strategy.

Of course, there are advanced ways to do this – I’m just giving you the basics – where you can actually trade the options you’ve sold against your stock and make even more money but that’s too advanced for an introduction.  Right now, we’re going to keep it simple.

The strategy is easy to implement and any broker can help you understand the process.  All you need is a regular stock brokerage account with options trading privileges.  The commissions are low – on a trade of this size, we may pay only $50 by the time it’s over.

A Special Note on the Risks of Selling Covered Calls

(One important note: You must never – and I mean never – sell contracts for stock that you don’t own outright!  Here’s why: If U.S. Bancorp had gone to $40 per share and you didn’t own the actual shares, you are on the hook legally to sell 6,000 shares at $19.00.  Thus, if you don’t have them, you would have to buy 6,000 shares at $40 each so that when the contract holder sends you the $19.00 for your shares, you have the stock to trade them.  That would cost you $240,000 – and you’d have to sell them for $114,000!  Thus, you would have a loss of $126,000 (or $119,400 after backing out the profit you earned on the call contracts you sold).  This extremely risky practice is known as selling “naked” calls because you don’t have the stock sitting in your account.  You are taking on unlimited liability – if the stock went to $100 per share, you’d have to come up with it because you legally owe the people who bought your contracts those 6,000 shares if they choose to exercise the contract!  So, repeat after me: I will never, under any condition, for any reason, sell naked call options.)

Right now, shares of Abercrombie & Fitch are selling at $27.27 each, down from nearly $85+/- before this crash happened, dragging even great businesses down with it.  The company earns profits of $5+ per share, giving it a price-to-earnings ratio of 5½.  The business is beautiful.  It is one of the most profitable companies that I’ve ever seen and even though it is certain to be hit hard during a recession or depression, it has no long-term debt and could likely survive as competitors were forced out of business.

Working from headquarters, I came to the conclusion that I love Abercrombie’s stock at this price.  Even if it falls by 50% from here, it is so ridiculously cheap that in ten years, I’m going to have a lot more cash thanks to dividends and earnings.  Instead of buying the stock outright, though, I can write “insurance” on shares of Abercrombie & Fitch by promising investors that anytime between now and January 16^th, 2010, I will buy their shares from them at $25 each any time they want.  In exchange for making this promise, they pay me cash of $6.80 per share.  Each “insurance” policy I write is called a “contract” and covers 100 shares.

The Economics of Writing Put Options on the Shares

Through my broker, I could write 200 contracts on these terms.  Immediately, $136,000 in cash is deposited into my account (200 contracts x 100 shares per contract = 20,000 shares x $6.80 premium per share = $136,000).  This money is the “insurance” premium that was paid to me.  It is mine forever.

Known for its provocative annual reports, catalogs, and branding, Abercrombie & Fitch boasts one of the most impressive per store earnings figures of any retail chain on the earth as measured by profit margins and return on equity.

At the same time, it is possible that some day, without warning, I’m going to have to buy 20,000 shares of Abercrombie & Fitch at $25 per share.  That’s $500,000 that will need to be sitting in my account.  Remember, though, that I already received $136,000 in premiums so I’d only have to come up with $364,000 in fresh cash.  To protect myself, I would take the $500,000 ($364,000 in new cash and $136,000 in cash from the premiums I received) and invest in U.S. Treasury bills, the safest investment in the world because the United States Government guarantees them.  Imagine I could earn 1% on them, which isn’t great but it’s better than nothing.

So, here I am with $500,000 tied up until January 16^th, 2010.  I can’t do anything with it.  It must stay parked in the account.  However, we now have two potential outcomes:

1. If the person to whom I sold the contract never exercises the stock options, they expire and cease to exist.  In that moment, I am off the hook and will never have to buy the shares.  The $500,000 is completely unrestricted and could be used for anything I wanted – investing more, buying a house, buying hamburgers … you get the idea.  For tying up $364,000 of my money for a little more than a year, I was paid $136,000 plus the interest earned on the Treasury bills, giving me a compound annual rate of return of more than 38.36%.  That is off the charts.

1. If the put options are exercised, I buy the $500,000 worth of the stock.  However, I am still better off because I paid $25 per share but I was given $6.80 per share in insurance premium so my net cost is $18.20 per share.  Remember, I was going to buy the stock outright at the current price of $27.27 anyway, so I would have been sitting on a substantial loss had I not written the contract! Now, I own the shares at $18.20 and even if they crash to $10, I only have a loss of $8.20 per share instead of $17.27 per share.

This is important because I was going to buy the shares anyway.  If they are worth $60 or $80 in five years like I think they will be, I got to buy them all at $18.20 per share.

In either case, it is a win-win proposition.  In exchange for providing protecting to panicked investors, I get to literally mint money for a stock that I want to own at these prices anyway.  The more capital I have on my balance sheet, the more contracts that can be written.  My job is to make sure that if all of the put options we wrote on Abercrombie were exercised, the money is sitting in Treasury bills to cover the potential purchase price and that if the stock fell below the $18.20 level, I’d have no emotional problems looking at those huge paper losses for a few years until it recovered.

Last week, I wrote some contracts through one of my personal accounts and if there is time before the market corrects itself, I plan on writing a whole lot more through Mount Olympus Awards, Chenille Appeal, and some other capital under my control.  Even if we went into a depression, in ten years, it will look like I just started printing money from headquarters.

Thoughts on the Crash in General

Right now, people are selling their ownership in businesses such as McDonald’s, Wal-Mart, Coca-Cola, Abercrombie & Fitch, General Electric, U.S. Bancorp, Johnson & Johnson, Procter & Gamble, Harley-Davison, Home Depot, etc. because they are scared that the market is going to go down even further.  (It may.  It could get substantially worse and could last for some time.)  After diligently buying ownership in these businesses, they got so spooked by other people selling their shares that they immediately assume that they must not know something and begin to sell themselves.

If watching your portfolio fall in value as other people make mistakes and dump their stocks upsets you, then you don’t understand the nature of what we are doing.  Investing is buying future profits so you can sit in your home and live off the businesses. Less than one year ago, you could buy all of Abercrombie for $7.35 billion.  Today, the entire company is selling for $2.37 billion.  Yes, profits are going to be hit hard in the next year or two, but given that the firm generates $435 million in profits, even if they fall in half, isn’t that still a fantastic deal?  You’d be paying 10x earnings for one of the premier retail brands, earning 10% on your money and when things finally did recover, you’d have gotten it for 5x earnings, or a 20% yield!

Over the past year, we’ve all watched trillions of dollars in quoted market wealth melt off the balance sheets of individuals, companies, and institutions.  And I’m more excited about stocks than I have ever been in my entire life.  Now is the time to get rich.  There are extraordinary values out there.  Stocks are not squiggly lines on a computer screen that go up and down.  They are part ownership in a real business that generates real cash, and has real employees, just like our family enterprises.  The goal is to buy a stake in them so you can make money from your business rather than your labor.

What better time to buy than when people are panicked and will sell you something that only a year ago, they were scrambling to buy themselves, borrowing money to do it?  Buffett has long said the secret is to “be fearful when others are greedy and greedy when others are fearful.”

To be upset about your account falling in this environment is asinine, short sighted, and foolish.  Real businesses are being given away, and courage combined with cash is going to result in substantial wealth in less than a decade.  I would love for the market to stay at a bottom for a year or two because it will set me up for the rest of my life.