Last week, I posted “Who Supplies Your Investment Information,” in which Jon Stewart took a shot at CBNC’s quality (or lack thereof) of investment information. While you were probably enthralled with the current bear market rally, you may have missed the ultimate encounter between CNBC’s Jim Cramer and Jon Stewart.

I don’t watch CNBC, but seeing Cramer get dressed down on Stewart’s show with intellect and better arguments makes me wonder why anybody every would watch Cramer to begin with.

In case you missed it, you can view the encounter at this link:

http://www.thedailyshow.com/full-episodes/index.jhtml?episodeId=220533

I am feeling lighthearted today, so you may want to also view “The Buy and Hold Rhapsody” which, unfortunately, contains a lot of truth about what has happened to a lot of investors over the past 1-1/2 years. Enjoy:

A solid rally simply ran out of steam as yesterday’s chart clearly shows.

The Dow, which was up some 175 points at one time, gave it all back as bullish sentiment faded into the close.

Fed chairman Bernanke tried to chime in this weekend by attempting to spread a dose of optimism during a rare TV interview on ’60 minutes.’ His view of the recession coming to an end “probably” this year can’t be taken serious as he was of many officials who did not see the perfect storm brewing last year.

On a different note, reader GH pointed towards an interesting website, and especially a Podcast featuring Harry Dent and Mish Shedlock.

It’s about an hour long, but well worth the time listening as the host of the show has some not so kind words to say about ‘lazy portfolios,’ ‘buy and hold,’ ‘incompetent brokers,’ and several other issues that I have touched on from time to time.

Go to this link and scroll down the page until you see the Podcast icon. Then play or download at your convenience.

Several readers have already implemented some sort of hedging strategy to protect themselves from sudden market downturns against existing holdings.

One mistake I noticed has been what I refer to in my e-book as hedging apples with oranges.

Just because you are holding certain securities in your portfolio does not mean they are suitable for hedging. The best way to succeed is to make your fund selections with the purpose of hedging in mind and then pull the trigger when the Hedge TTI gives the go ahead.

Along these lines, one reader had this question:

When we implement the hedging strategy, do we need to pick up mutual funds which show positive returns in the last 3 months or 6 months or what?

Will appreciate your guidance.

Since the Hedge TTI is based on a short-term trend (10-week moving average), there is a good chance that only a few domestic funds and ETFs are showing any positive momentum figures at the time a Hedge buy signal is generated. Take a look at the domestic ETF tables and mutual fund tables of 12/25/08, just days before I initiated the Hedge.

You will also notice that M-Index rankings are still in negative territory. It is far more important that you select your funds/ETFs based on the Beta as outlined in the book. That should be your main criteria. If by chance your selected funds/ETFs are also showing positive momentum numbers, consider that simply a bonus.

Lately, the most frequently asked question has been as to when inflation will be a threat again and how it will affect us. Mish at Global Economics referenced an article, which succinctly addressed this problem:

Will this printing create [price] inflation? This is dependent very much on what money will do next. If banks will not lend and banks sit on that cash forever and ever like the great depression because the risk is too high and the banks do not know if the lending will end up in good assets or bad assets, and because banks are in so many bad assets now they probably will not lend at all.

A good example is what happened in Japan in 2001-2002 where the Bank of Japan pumped 300% at one stage and lending continued to collapse. I expect similar things to happen here. If lending will not increase we can conclude this will not be inflationary.

[My Emphasis]

I agree with the above. However, we’ve seen an incredible destruction of assets and wealth in general over the past 1-1/2 years, which now has been estimated at some $20 trillion. This wealth loss is far greater than the monetary expansion of the Fed and is, at least in theory, supposed to limit the effect of reflation for the time being.

In yesterday’s post, I made the argument that the dollar may not be destroyed to the degree many think because all industrialized nations are following the same theme of attempting to flood their economies with money via bailout and stimulus packages.

In other words, if we’re all doing the same thing, all currencies may be destroyed at about the same rate. If that happens, there is no longer a “reference” currency to measure the destruction against.

Same with inflation. If all major world economies are inflating at about the same rate, how will it affect the U.S. when there is no yardstick to measure against? This is where I have problems understanding the currency devaluation argument.

My conclusion is that we are entering a scenario unlike any in the past. Many comparisons have been made to the 1920s and 1930s. However, the world was not such an interconnected place as it is nowadays. Things that happened in the U.S. back then did not have an immediate effect on the rest of the world and vice versa.

I don’t think anyone has the answer or the ability to somewhat accurately forecast how these current circumstances will play out in the future. Relating these uncertainties to investing, I am more than ever convinced that being disciplined and following trends in the market place is the only way to survive in this potentially treacherous environment.

Recently, reader Robert submitted a video clip analyzing the history of money printing and its recent acceleration. Take a look at it, and then we’ll discuss some of these issues:

http://www.youtube.com/get_player

Sure, long-term, there will be an inflationary effect, and I’ll comment more on that tomorrow. But what about the dollar? Will it be sharply devalued as the effects of reckless printing will filter down into the economy over the next few years?

I am not so sure. From my non-economist view, I think the video is too one sided, because it overlooks one critical aspect, which was never applicable to any degree in the past.

The bursting of this current credit bubble has affected all industrialized countries in all parts of the world. It may have started in the U.S., but it spread like a wildfire exempting no one along its destructive path. Over the past few months, the daily headlines have read like a “who’s who” by listing country after country implementing their own version of bailout and stimulus packages.

To me, here’s where it gets sticky. If all industrialized nations follow the same path of printing money to prop up their respective economies, will that not weaken their currencies as well?

Is it not true that, if only one country engages in the reckless printing of money, its currency will lose value only when compared to those countries with a more responsible monetary policy?

This is where I believe we have entered unchartered territory. All nations are doing the same thing, which does not make it right, but I am wondering if we, as a world community, will really be suffering from a bout of currency devaluation? Somehow I can’t see how, given these circumstances, we will all be devaluing when there is no longer a standard currency to peg to.

Let’s assume that magically a major country emerges that does not participate in these money creation efforts, was not effected by the global crisis and has otherwise proven to be fiscally responsible, then our dollar would slide against that super currency. However, in relation to all others, the effect should be minimal and vary only to a small degree.

I have not heard anyone addressing this issue with the global view in mind. If you have more information on this important topic, please post your comments.

My latest No Load Fund/ETF Tracker has been posted at:

http://www.successful-investment.com/newsletter-archive.php

The bulls came out charging after the S&P; 500 made a 12-year low on Monday, and pulled the major indexes out of the doldrums.

Our Trend Tracking Index (TTI) for domestic funds/ETFs remains below its trend line (red) by -9.47% thereby confirming the current bear market trend.



The international index now remains -17.28% below its own trend line, keeping us on the sidelines.