In Praise of Candor

Existing-home sales came in higher than expected with a gain of 2.9% to a 5.03 million annual rate. Median prices fell 1.9%, which translates to an 8.2% annual decline. "Price capitulation" probably contributed, says John Rosenberg at Merrill. So what! If that's what it takes, let's get it over with.

Permits for new home construction were at the lowest level in 17 years last week, and it was treated as woeful news. Better they go to zero to clear out the inventory of unsold homes. This is at least a tentative sign of a floor for housing demand.

CIT (CIT - commentary - Cramer's Take) is up almost 30% at this moment after flirting with disaster last week when the commercial paper market was closed off to them. I don't own the stock and have no affiliation with the company in any way except a long friendship with the CEO, Jeff Peek. He and I were classmates some 150 years ago. (He only looks younger.)

CIT got caught in the same muddle as many finance companies. The Wall Street Journal had a critical but fair article today on the company, and my good friend Jim Cramer took the company to task last week on the air. I can add nothing to the news flow except to point out one thing Cramer said. He looked at the financials of CIT and said the issues facing the company were spelled out in glaring detail, and the problem loans are there to see. This to me is high praise. The problems are there for all to see, which means the company knows what it faces and is not hiding a thing. Such candor should be the norm, but since it isn't, let's praise those that deal with reality.

Peek had the foresight to arrange $7 billion in standby bank credit in case of a major freeze-up of the credit markets. Had Bear (BSC - commentary - Cramer's Take) the same forward-thinking management, it would be more alive and well than the bargain bid JPMorgan (JPM - commentary - Cramer's Take) has on the table.

Saturdays WSJ had a wonderful article about the idiotic and foggy language in proxy material dealing with executive compensation. Applied Materials (AMAT - commentary - Cramer's Take), a company I have no opinion about, uses 16,245 words -- virtually all unintelligible -- to describe how executive compensation is set. This is twice the length of the U.S Constitution, all amendments included. When you can't understand it, it's because they don't have a clue, or they don't want you to understand it. Peek and CIT understand it, and they want us to as well.

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What a Long, Strange Trip It's Been
Posted at 9:30 a.m. EDT

What a couple of weeks it has been. The old saying of "what goes around, comes around" has never been more apt. The three men no one admires most -- Lerach, Weiss and Scruggs, the unholy troika of tort lawyers -- are all going to jail. With Scruggs you even get a father-son combo. Bullies all, who thought the rules didn't apply to them.

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Vincent Farrell Jr. is a principal of Scotsman Capital Management. Prior to joining Scotsman in April 2005, Farrell was chairman of Victory Capital Management of Cleveland and chairman of Victory SBSF Capital Management in New York. He was a founding partner of Spears Benzak Salomon & Farrell, which was acquired by KeyCorp in 1995. Vince held a variety of positions in his 23 years at SBSF, including chief investment officer, and he served as the portfolio manager on a number of the firm's largest client relationships. He is a regular guest on CNBC as well as other national print and broadcast media.

Prior to joining SBSF, Vince spent nine years at Smith Barney as a vice president, sales.

Vince graduated from Princeton University in 1969 and received his MBA from the Iona College Graduate School of Business in 1972.