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While I suppose I could have posted this to the Monday Memo board, since what I have in mind relates strongly to CAPS, I've decided to post it here instead.

Anyway... this week's Monday Memo, "Swami Says", talked about how CAPS All-Stars, on average, seem to be making fewer picks these days. I know I've been making fewer picks not only recently, but also for a good part of this year (though I'm still making them). There are a couple of reasons for this -- one of which is completely personal and unique to yours truly -- the other is perhaps a demonstration of some of my thoughts regarding the current state of the market and our economy.

As for the personal -- some of you may know that I spent a fair amount of time working on my Eldrehad's Picks blog. Time spent finding, researching, and writing-up picks for this blog was time I wasn't spending making picks as TMFEldrehad.

I closed my Eldrehad's Picks blog several months ago, so that doesn't explain why I've been making fewer picks since.

The best single-word explanation I can think of that would explain my lower pace of picks since would be: uncertainty.

Markets are always volatile, and I generally try to refrain from spending too much time focusing on daily market fluctuations. The way I see it, if I do my job well up-front and buy stocks that represent compelling value propositions, the market gyrations will eventually sort themselves out over time and I'll be rewarded.

What we've been seeing this year, however, is far from normal market gyrations. Between the housing collapse, the credit crunch, and the massive bailouts, we are now in the realm of changing how our entire economy, or large swaths of it, actually fuction on a basic, fundamental level. I, for one, don't pretend to know what the near or long-term ramifications of all of these changes will be. I do have a couple of suspicions and opinions, but it's becoming harder for me to make concrete, actionable predictions (which is what all stock trades, in a way, ultimately are) when things are changing so dramatically so quickly.

This doesn't mean I'm going to hunker down and quit investing. Far from it. Markets hate nothing if not uncertainty, which means that times like these have the potential to produce some of the most compelling value propositions in stocks that we may ever see.

The trick, of course, is finding them.

In short, I percieve both the risks, and the potential rewards, of investing in today's market to be higher than they perhaps generally are -- and I'm speding even more time trying to mitigate the former and capitalize on the latter than I perhaps have in the past. After all, I'm in no big hurry. These uncertain economic times are going to last a while yet.

To use a baseball analogy, I know that big, fat, juicy pitches are headed my way, but the guy on the mound has been throwing very wildly lately -- so I'm going to approach this at-bat with a bit more plate discipline. Yes, I'll go into the batters box prepared to duck, but I'll also be looking to take a big swing too.


Russell (a.k.a. TMFEldrehad)
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