"Yes, risk taking is inherently failure-prone. Otherwise, it would be called sure-thing-taking" Tim McMahon

Bear Stearns Cos. reached an agreement to sell itself to J.P. Morgan Chase & Co., as worries grew that failing to find a buyer for the beleaguered investment bank could cause the crisis of confidence gripping Wall Street to worsen... Both companies' boards have approved the transaction, which values Bear Stearns at just $236 million based on the number of shares outstanding as of Feb. 16. At Friday's close, Bear Stearns's stock-market value was about $3.54 billion. It finished at $30 a share in 4 p.m. New York Stock Exchange composite trading Friday.

Unfortunately, too many participants of the largest legal "gambling area" in the world called "Wall Street" believed that markets always go up... The little "secret sauce" of leverage made almost anything possible in this Wonder World of ever growing bonuses, stock prices and egos. The party time is officially over...

"March 16 (Bloomberg) -- The Federal Reserve, in an emergency weekend decision, cut the rate on direct loans to commercial banks and opened up borrowing at the rate to primary dealers in government securities"

Bear Sterns is being sold to JPM for a mere $2 a share which represents less than 3% of the company's book value... Too bad for anyone who believed in the "sure thing" earnings of the investment banks and wondered why in the hell would they sell at such ridiculously low P/E multiples...

I am fully aware that tomorrow is likely going to bring a lot more pain to the net worth of most investors out there, I think that hopefully the lessons of Wall Street's most recent ultimate fiasco won't disappear in memories as quickly as the previous ones...It is almost easy to predict now that most standalone boutiques (read large hedge funds) like Lehman are also destined to repeat Bear's faith... Counterparty risk is the new "sub prime" and chances of any large hedge fund keeping their funds with small players like LEH are now very small. The big winners in the long haul are going to be JPM and BAC (may be WB and WFC). They have a benefit of being funded by retail investors and aren't as prone to pull their money out as the large hedge funds... Citi is now simply a relic of the past and could easily end up being sliced up in pieces and sold to whoever is still willing to buy after it goes to single digits...

Look for many more near failures of large banks, failures of the smaller ones, more bailouts and continued deleveraging of the Wonder Land and the entire world. Chances of many fixed income focused hedge funds and highly leveraged companies like TMA (20-1 leverage) to survive have just gone done to almost zero... I say shorting the liquidity crunched entities is now the closest investment strategy that I could find that approaches the new "sure thing" status...

I also think that assuming Fed does what everyone expects it to do now, and actually cuts rates by a full percentage point may be even prior to the regularly scheduled meeting on Tuesday, it will likely contribute even more fire to the next potential "bubbly" area- commodities including agriculture...So stay tuned here :)

What I would also recommend for anyone who has been following my blog for a while, and who is hopefully net short the market, is to watch and wait for the fear to finally overtake the greed as the main theme of the "expert CNBC shows" in the next several weeks. If you still keep hearing statements like "now is the great time to buy" tomorrow- ignore them- you are likely to be too early...

In the markets like this, good investors should fear that stocks can down more, rather than hoping that they go up...

Stay safe and cheers,
skepticalcapitalist@gmail.com

P.S. Short the BIDU and GOOG- both are simply houses of cards built on another "sure thing" idea of ever growing and "recession immune" advertising schemes...