Today the house voted down the "bailout to end all bailout" bill.  In the meantime WaMu and Wachovia was dissolved by the FDIC and the market went down 777 points today.

At this point I have no idea in which sectors have any value.  If China, Brazil, Russia and India have really disappeared from the Earth...then nothing has value.  Infrastructure, coal, shipping, natural gas/oil, ag and some financial stocks are beyond meltdown levels at this point.  Where was some of this pessimism when hedgies were setting new highs daily on these stocks just 2-3 months ago?

I think if you do jump into stocks, you need to take advantage of this elevated volatility and sell the up call.  Collect some income, reduce your cost-basis while you wait for the market to recover.  I think there is value in fertilizer stocks and tech right now.  I still think bank stocks are overpriced (with or withou the bailout) and stocks like PNC, BAC, WFC and CMA can't hold on to its huge recent gains for much longer.  

I think if you do play this market, you need to bet against the consumer.  That means mid-level retailers will suffer.  Wal-Mart, Costco, Dollar Tree and Big Lots will be fine.  True Religion, Guess, Target, Williams Sonoma and Barnes & Noble will suffer.  Commodity stocks appear to be grossly oversold, but rallies are opportunity to sell and not buy as the charts look hideous.

The four horsemen of tech AAPL, RIMM, GOOG and AMZN are all at or near their 52 week lows.  Their charts are badly broken.  I think going forward they are being priced as mature, low-growth companies rather than the high flying momentum stocks.

The positives of this meltdown: If you liked stocks at levels 100% higher than they are today, then you have to love them now.  Hedge funds melting down will eventually lead to less volatility as the short-term gamers are leaving the market.  There will be a bottom soon, once the panic selling ends.  I've never seen stocks with price to earnings ratios so low in my entire life.

The bad: If hedge funds are melting down now, pensions maybe next.  The federal govt, states and municipalities promised fat pensions for all their retirees.  But when the stock markets are melting down, how do they pay them?  Mix in growing expenses, budget deficits, lower tax revenue and increased spending for poor people...you have the perfect storm.  Nobody who has worked 20-30 years should retire on full pay to begin with.  What we need now is deleveraging of taxpayer dollars.  We are not the bottomless pit of cash.  The private sector is suffering...why are the public sector employees getting fat raises and benefit bumps?

In this kind of market ducks and chickens can pick stocks better than any so called experts.  Remember the big secondary on WB and 7 billion dollar investment in WaMu?  Those guys weren't supposed to be morons.