Bolling: Stay Calm Amid the Chaos

I applaud those actions and those only. I am a free market advocate and have a hard time justifying some recent Fed and Treasury actions, but the protection of our deposited money in the various money market funds was brilliant. It differentiates the Wall Street risk from Main Street fallout. I agree that most on Main Street could care less if Lehman bankers are out on the street looking for work. I agree with them: That's the nature of risk and working for a company dealing in risk as its business model.

But when Mom and Pop on the corner of Main and Elm are worried about their cash deposited in the bank, we come face to face with the possibility of a a run on the banking system. We all lose in a run on the bank. Wall Street freezes and Main Street panics. The scary thing is that the panic would be justified as no one knows what ends a run on the modern bank. I certainly don't and haven't heard anything out of the government regulators and lawmakers that addresses a run on the banking system. So I bought 3-month T-bills for almost no yield. 80 basis points! I did not care that I would be getting three times that amount in normal times. Last week was not normal. I have no gut feeling what the next few months will bring. As my pal Dennis Gartman would say, if you put a gun to my head to guess what is next, I would choose "just pull the trigger" option. Its the safest!

My bottom line here is to keep calm, be nimble and this is not the time to take risks that haven't been fully vetted. I have reduced my exposure across the board, moved cash into T-bills and am waiting for a more clear sign of stability before putting more money to work.

As an update, I am long Goldman Sachs(GS), Toll Brothers(TOL), Hovnanian(HOV), CME(CME), the dollar index, gold, Exxon Mobil(XOM), Devon Energy(DVN), Chesapeake Energy(CHK) and Chevron(CVX). I am also looking for an entry point into natural gas futures. I haven't added new positions and am playing very close to the vest right now.

This means more now than any other time I have written it:Trade with your head and not over it!

>To order reprints of this article, click here: Reprints