The massive bailout and how it affects us...

Berkshire just injected $5 Billion into Goldman Sachs, while the Fed and Treasury announces a $700 Billion bailout. Despite the market turmoil, I'm going to guess this signals we're closer to a bottom than a cataclysmic meltdown in equities and real estate. We'll still have to endure a couple more years of pain before the economy and the housing market recovers. I think we'll have a couple more big legs down and more bank failures, but bottom fishers should eventually do well by investing in companies with strong balance sheets. Having said that, Christmas will be subdued this year.

The big risk is that more financial institutions become victimized by the cascading insolvency, as many are linked due to naked derivatives. which encourages high-risk speculation without accountability, which got us into this mess in the first place. Leverage works both ways--it's great for maximizing returns in a healthy economy, but it's lethal when markets are unwinding. Right now, we are experiencing a de-leveraging process not seen since the Great Depression. If more big banks start going under, buy more ammo--it's going to get uglier.

Hopefully, the worst is behind us, but I'm not jumping in just yet--I need more proof this tanker is going to turn around. The thought of buying into a fire-sale is enticing, but I'm not going to try to catch a falling knife--it can cut you. I want to see more blood in the streets, and the whites of people's eyes before I dive into the deep end of the pool. For now, I'm happy to be wading in the kiddie pool.

Good luck people--it's going to be a wild ride. This downturn will be a doozie--the worst in our generation, but eventually we will recover, I assure you.

Hunker down, work the extra overtime, use generic instead of designer labels, and ride this sucker out. Don't wait for the other shoe to drop--even if you are currently employed, be prepared for impending layoffs. Work you network, stay in touch with your influencers, and plan for the worst, while hoping for the best. Save for a rainy day, because this is that rainy day. And remember: equity is not cash. Cash is cash. Stay liquid.