After what many would assume would be the lowest point we'd expect to hit in the Dow, hitting the 7,000 mark for the first time in ages, I'd beg to differ. Long time bell-weather of economic resilience, consumer and retail spending in the holiday season is in jeopardy. With BestBuy in anguish, Circuit City filing for bankruptcy and holiday sales expected to slow for the first time in 25 years my prediction is that we have not yet hit a bottom in economic angst. All the bears need is to see the actual results of retail spending to drive the Dow down below to 1980 levels, and it's shaping up to go that direction given the fact that even American Express is seeking protection by converting to a bank to take advantage of the TARP scheme. Maybe every company with debt should consider becoming a bank... Still, the market overall is going to psychologically be swayed by consumer fears about the upcoming retail season. I've yet to see any indication of how the federal financial bailout plans are doing anything to protect the consumer who is ultimately paying the bill twice, once in lost homes and second in tax hikes to offest the debt. In what could be one of the greatest acts of corruption-fueled-socialism in our modern era, the bailout plans have been kept Guantanamo secret for one reason: the administration doesn't want anyone to know how the money is being used, because in reality, its a raw deal for average citizens. The financial institutions are paying themselves, and the government is ignoring the consumer.I'm still shocked how in a government so god-fearing and anti-socialist that more citizens haven't raised their hands to comment on the nature of the bailout as being completely socialist in it's nature. Even more troubling, is that it is practically an dictatorially decided, purely elitist-benefiting move that is socially funded. Read: the rich stealing from the poor. This is taking the government back some 600 years to the level of paying tribute to the royal kingdom. It escapes me how the government can endorse unsafe financial practices in the first place, and then further endorse those actions by providing more cash to the institutions responsible for the meltdown. In effect, the government is rewarding the actions of shady executives meeting at luxury retreats and ignoring those with true problems: the average consumer facing the reality of the downturn. Where are the foreclosure freezes? The interest rate freezes? By siding with the banks, it's as if the government is blaming the uneducated masses for being conned into junk debt. It's everyone's responsibility to be an educated consumer, but in extreme circumstances as we are in now, if the government doesn't side with the people, who will? And, what will happen in the next bubble in seven years? What scheme will Wall Street use to shill the moms and pops around the country next time? It seems like people never learn to distrust the Street.

Whew! After the Fed maintained rates, the market finally grew some confidence, replenishing support levels for several of my long positions. If you've been keeping track, I went long on Whole Foods (WFMI

) after it fell from 64. I dug deeper at 55 and even at 47, after the stock went through a cyclically enforced multiple contraction: basically, Whole Foods' stock was expensive relative to other peers in the food industry, such as Safeway and Krogers. It's PE was up in the 50's, while the competitors were half that amount. Hence, in a time of economic uncertainty, investors will not pay for stocks that are at a premium to earnings - in fact, those who are risk averse will actually short these positions and reap the earnings thus far, subsequently dropping the share price for others. Now, as I learned with Apple, high profile stocks with high multiples are very market sensitive, and are the first to fall to cyclical impacts. However, despite my humble and limited experience, I have learned that staring at chart prices is a complete waste of time - as you are not looking at the long term prospects. The question I asked myself when Apple tanked from 60 to 50 the day after I bought it, was the same question I asked with Whole Foods fall from 64 to 47.

Did anything about the underlying fundamentals of the business change?

The answer was no. Did the competition overtake? Did the company make a poor fiscal choices? Did management jump ship? Did any experience on a consumer level hint that the jig was up?

No.

So what's the explanation? Most investors, I'd hate to admit, are not looking at the long term. Long term wisdom is rare and it defines a successful investor (or gambler, for that matter). If you know something the market doesn't (or doesn't want to listen to because they are being emotional) then you have an edge.

I've learned it's a rookie move to bail on a stock (or mutual fund) if for only the stock price drops. Sure, this sounds obvious. However, you'll never truly know how it feels untill  you have a sizeable position, lets say,$10,000 in a fund, and it depreciates by $3,000. This happened to me with  Vanguards International flagship (VTRIX

). It's doubled for me in the past few years thanks to expansion in emerging markets, so when I lost almost 60% of that growth in this past May's bleeding, I panicked and I sold. Man, I have a knack for selling. Would you believe I sold at the absolute low, the trough at 35 before it immeidately ran back to the 40's?

Sweet. Selling actually cost me that $3000 I earned. Had I sit tight and researched more before pulling the trigger, I would have realized the truth behind my newest favorite saying:

Selling does not erase the loss. If it's down already, hold ship.

If you think about this, this strategy is (practically) infallible in the long term. The stocks will rebound just by the nature of economic expansion, even if by just accounting population growth. In other words, for one to state the market will not rebound (or grow) is not have confidence in economic expansion, period. In which case, we have a lot more to worry about than the market.

Selling should only be qualified by a change in fundamentals, market cycles or ... selling into strength. As in, you've made sizeable gains, and it doesn't pay to be greedy. Even the best play will sour at some point, when the big boys call the game over.

Now, having learned that lesson (from hard-learned experience, not just from a book), and the lesson of Apple, I applied this to Whole Foods. Did it bounce back from 47? Yes, its at 55 now. Why did I buy? Becuase the fundamentals didn't change from the time I bought at 64. Yes, the market was not favoring the stock in this cycle, but cycles come to a close. When the economy rebounds, Whole Foods will be dramatically undervalued. I've already made 18% on the play at 47. When it rolls back to 64, I'll have made nearly a 50% gain on the 47 buy.

All this tells me is that I bought WFMI too early. Sure, easy to say with 20/20 hindsight. Did I research? Sure, in fact it was down from 80, so 64 seemed like there was a misvaluation. Truth be told, this is my first market cycle to contend with, and I need to ride them out a few times to place my bets at better times.

Such is the fun of investing.

Sanebull

is an innovative and functional desktop for active traders. I thought I was in love with Google Finance, but this takes a drastic leap forward in terms of creating a unified dashboard. Although I'm a big fan of the live updates, until charting is implemented, I can only bank on this site for it's potential. I'm looking forward to account management features, as reentering your stock picks is less than ideal. More than just targeting the finance sector, which is IMHO the wisest of decisions when creating incubator software for a specific audience, I really enjoy the overall framework built for window management. By far the best implementation I've seen to date.