Stock Picks for August 9, 2007

We may have missed both the SAIA average down and the NYX.  We will keep them open just in case. If this ends up being the biggest fake in history in the market we will be disappointed.  We still think there is much more to come from the subprime fallout.  These things cycle in much larger time periods.  This reminds us of the year 2000 bounces where people were saying "Hey everything is ok" and then they would say "Oh No!" What we didn't expect is for the brokers to bounce back this quick.  We thought there was a lot more downside in the short term.  Yes, we were wrong.  Kind of. By our calculations there is somewhere between $0 and $1.4 trillion, yes trillion, dollars at risk here in sub-prime. Still.  The subprime home owners are still defaulting.  Every day.  For how long?  Is it $200 billion in losses?  More?  Who is left holding the bag?  It is usually us, the retail investor.  So, when the earnings reductions start coming out for the brokers where do these stocks go?  This is our long term philosophy.  If something changes where we are not willing to hold for the long term, then get out, even at a loss.  As a trader it is obvious that we could have 'betted' for this bounce and got some of the losses back.  From your emails it is obvious some of you are doing this.  From a trading perspective, we were definitely wrong.  From a long term investing perspective, we think we are right.  Time will tell. We think there will be further decline and if we test the lows again successfully we will open 3 to 5 new Stock Picks.  Until then, stand by.