The S&P 500 is Struggling And Peaking

6/22 - "We are sometimes asked why emerging markets are so much more volatile than developed markets. The answer is that, due to their relative size, money flows between them cause most of the volatility effect."

"Today, the developed markets free-float (represented collectively by VTI, EWC and EFA) is about nine times the size of the emerging markets free-float (represented by VWO). Within the total equity allocation of all investors, an increase or decrease in the developed markets allocation will show up as a magnified opposite change in the emerging markets allocation."

"The greater the supply-demand pressure, the greater the degree of price change.

Considering the current 9:1 developed-to-emerging markets ratio, if the current bear market causes collective investors to become more risk averse and to significantly reduce their emerging markets exposure in favor of developed markets, the emerging markets would be crushed."

6/22 - "Often times it is not the leading front of the hurricane that does the most damage, it is the backside. Here is the three stage pattern of hurricane damage...The "calm" Bernanke thinks we are in, is nothing more than the prelude to the back side of a hurricane."

"I spoke about credit card delinquencies yesterday in $2 Trillion Reduction In Credit Card Lines Coming Up. But credit cards and home equity loans (HELOCs) are just two of the impending problems.

Commercial Real Estate is yet another backside of the hurricane. More realistically, it is yet another hurricane that is just hitting shore, and it too will have an eye, followed by a false "all clear", followed by another devastating backblow."

"This is not a simple storm. This is a complex series of storms. The only storm that has landed full force is subprime. The Pay Options ARMs hurricane is about to hit, or is just hitting now...The eye of the commercial real estate storm is still miles out at sea."

"Unemployment is a lagging indicator. That fact has been used to suggest the worst is behind. The idea the worst is over is nonsense...Batten down the hatches, the worst is yet to come."

6/21 - " We’re in a dead spot, a lost decade; old certainties are being tested, and many clever investors (alas for Bill Miller) are being weighed in the scales and found wanting.

This is actually a good time to become an investor, because it is a bad environment. You develop your skills when expectations are low, and the battle is tough. But you have to confront the four stages of investment knowledge."

"Stage one is being puzzled, and knowing that you don’t know much. There is extreme caution and risk avoidance, and so much of the market appears to be random. But with some drive, there is a desire to learn, and that leads to stage two.

A little knowledge is a dangerous thing. It can come in the form of articles like “Ten Best Stocks to Buy Now!” or “The Simple Formula That Beats the Market, in One Tiny Book.” Whatever...Stage Three is the rare point, because it comes after some failure in stage two, because the world wasn’t as simple as the few experts initially read would indicate...his is a time of study, and modest experimenting in investing, learning risk control, and understanding oneself."

"Stage Four is where the survivors prosper in a limited way. They know that the market is fickle, and have learned that their methods may be good in the long haul, but may underperform in the short run. They don’t panic, they keep learning, and they persevere in times of fear and greed."

"Investing is a business. Spend time studying...Don’t let a few early losses get you down. Investing is rewarding over the long haul; you can never tell when the game will get easier."