What a market. What a market! This market is nuts. But you can't fight it - you can only deal with it.

I was somewhat surprised at the Fed's lowering rates; I felt it was something like 60-40 that they would do nothing this time. Anyway, they lowered both the discount rate which is the rate at which banks borrow from the Fed, and the Fed Funds rate which is the rate at which banks borrow overnight from each other. Both rates were lowered by 1/4 point, which is emphatic, in that they could have lowered only one of the rates. This is indicative of their concern for the fragile nature of the world economy, and the recognition that the U.S. economy is the one that drives the world. Translation: the Fed wants to make sure that our economy doesn't slow down and push the rest of the world into the dumpster.

Reviewing what happened and why is the easy part. That's why the universities and colleges of the world can crank out historians like army ants on the march. The tough part as always is trying to anticipate the future, and there are damn few or consistent anticipators around. I know that my crystal ball looks more like a bowling ball.

What this means is that you can only approach a market like this on a money management basis. What do we mean by "a market like this"? We mean a market that has been rising for many years now, is very choppy with a lot of big jumps and big drops, apparently has great speculative excesses in the Internet group, and all this with a backdrop of a slowing U. S. economy and weak economies in many parts of the world.

What do we mean by "money management basis"? Let's start by examples. Most of us know people of comparable skill, who have quite differing results regardless if their investments are in quality bonds, the stock market, or blackjack tables in Vegas. Money management requires a decreasing investment following losses, and increasing investment following successes. It requires hedging your investments over security types, over markets, and over time. Above all, it DEMANDS PATIENCE.

When markets are soaring, it's so damn tempting to leverage to the hilt and concentrate your resources in a few "hot" areas. And when markets are tanking, the temptation is to get out fast and take whatever losses come with a quick exit. We don't want to do either. We want to be patient and reasoning at all times, and not whip ourselves when we lose potential profits or take additional paper losses, while doing what is wise.

Well then, what is wise, especially in this market? I'm glad you asked. Wise is Stock Lent of course! If you've forgotten, it means no margin, no momentum stocks (darn it - I'd like to own a few measly shares of a top Internet stock just to say I have some; that would probably kill the whole move), and no chasing high flyers (more Internet stocks). Again, when in doubt over any stock you have, regardless of whether it's up or down, always consider selling half and keeping half. The mental comfort of doing so is a great benefit also.

The market's strength in coming back like it has since early October is nothing short of amazing. Where everything was gloom and doom, it's now the battle of the bulls. I'm a bull too, but nothing goes straight up. Especially markets. This market is thriving on easier money, and like they say, "Don't fight the Fed." Their action indicates they will most likely lower rates again, either in their December meeting or early next year. With this as the interest rate backdrop, it would be very unlikely for us to slip into a bear market. But even though this indicates an up market in 1999, we should anticipate periodic bouts of pessimism and the selling that goes with it.

I have taken my own advice, which is tough medicine indeed. I sold a few winners and fewer losers and raised some cash. If I see a special situation or two, I may well step in. If not, I will wait for the tax-loss selling which is almost sure to come. There is only a little more than one month for this selling to begin, and I don't see why this year should be any exception. So be patient, and accumulate cash. Because you never want to forget - CASH IS KING!!! Stay tuned.