So we have all been through some of the worst economic times that we have seen in most of our lifetimes. We have seen the stock markets lose over half their value, we've seen a fixed income environment that is virtually impossible to make money and what we have seen in the past nine months is not price deflation, but rather price destruction.

Albeit there were many indicators of a housing bubble, there were few who predicted the spillover we have seen from sub-prime to the current conditions we have seen today. There are many reasons for how and why this happened. I am not going to go into extensive detail here. However, these reasons range from our politicians, to poor lending practices (some of which stems from our politicians) and someone who often escapes blame, the American consumer.

So with all of the negative things that our economy has seen, it has been exacerbated by many things. Everywhere we turn we hear about the negative economy. This has been going on for sometime. It started with the election and has carried on right through today. It is almost impossible for this negative discussion to not have an impact on the psyche of the American consumer.

I have a good friend who is an auto dealer. When asking him about his business given the circumstances today, he said business has been good. In the same breath he said "I got tired of hearing all the negativity in the news, I turned it off and have just focused on selling cars."

It is ironic to me however how no one was willing to tell the American people of all the concerns out there prior to this period. It is my belief, especially when you talk about the real estate bubble that no one had incentive to inform the consumer for several reasons. Here is why:

The realtor: Their interests are in selling real estate. They need to sell to make a living.

The lender: They have incentive to lend. Generally they sell loans on the secondary market so the goal is to get a deal approved by the secondary market underwriters, close the deal, sell it and collect the commission.

The government: The government had no incentive as well. They were attempting to get "all" to own homes. As we now know, this was a major reason for the credit issues we are seeing today.

One of my colleagues, Terry Hennessy, was preaching to our clients well before 2006 of the risks in Real Estate. He was dead on with his analysis. Many in Iowa City would disagree with his assessment. A common response has always been, "this is Iowa City, we are insulated." As I work with clients throughout the country it is ironic, that most everyone says, "It's bad out there, but we aren't seeing those issues here."

So here we are as I have briefly touched on some of the issues that got us to where we are today. We are at a point where Americans are in fear. There is discontent about "nationalisation, TARP, TALF, mark to market, and where the markets will go." There is significant reason for people to have fear considering where we have come from and what we hear. However, what I am suggesting is that we take a step back from all the chaos and negativity that we have seen, to understand some of the opportunity that actually exists.

Opportunity: Now I am not saying to bury your head in the sand, but I am trying to emphasize that if you were to look at the stock market in August 2007 vs today, when do you think there is less risk. Definitely today. We have very reasonable valuations today. Many companies are trading at prices less than the cash they have in the bank. They are trading at historically low P/E ratios across the board. If you are a long term investor, what an opportunity.

Now as Jim Cramer has often said, if you need this money in the next five years, then stay out of the markets. I would wholeheartedly agree with this. It will not be a steady ride. Something that RPG portfolio manager Mike Marietti often states to our clients is that we are now in an area where there is great opportunity for tactical trading. Something we have not seen in quite some time.

The real problem for investors however is to get over this fear. An interesting article I read from Societe Generale discusses the emotions of a bear market. See attached. The point is, that when investors eliminate the emotions of historical declines, they tend to see significantly greater returns. Therefore, understanding that we are now in the situation we are in, we can't turn back the clock, but we can make decisions based on the situation as it presents itself today.

Now what one has to understand is the recessions are very common. Since WWII there have been 10 officially sanctioned recessions. They have averaged about 10.5 months in duration. As for the stock market, generally the market picks up well before the end of a recession. With $14 trillion in cash on the sidelines, it makes sense to keep a toe dipped in the market. I believe when the market turns, it will turn quickly. It doesn't take long for a market to rally, and for an investor to be slow to jump back in.

As you all have probably heard, Warren Buffett in 2009 stated "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." The significance of this is very clear, their is extreme fear in our nations and the world economy. This fear creates great opportunity for those that can leave the emotion out. That doesn't mean we will see those results immediately, but definitely in the long term. We do have recessions. We do have dips in the markets. Therefore, for the right risk profiles and client situation, if allocated properly prior to this turmoil, there will be great opportunity to put cash to work.