Financial-Sector Guru & Sherwin-Williams' Investor Talks Turkey

Today I posted several times on one aspect of the current meltdown in the financial sector - The Bear Mauling.  An expert on that sector, frequent commentator on this blog, and an investor in Sherwin-Williams read those posts and came away with a very strong opinion.  When I asked him if I could publish his opinion, even off the record, this sage said only if I made it explicit that it was only one investor's opinion - and underscore "opinion."

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One investment expert's opinion, off the record:

"Jane and other readers, this is only my opinion.  First of all, I hope that we get through the credit and mortgage problems and everything else is okay. But, we have to keep in mind that the Fed is not a bottomless pit when it comes to money supply. 

"If you listen to some experts, they contend that the Fed has roughly $400 billion left to use.  It had $800-$900 billion but has pledged $400 billion or so to back up all those instruments and liabilities at those brokerage banks.  Today Jane posted on Bear Stearns.

"I ask: What happens when the Fed has pledged all it has and the system needs more?  What happens when one of our creditors wants its money and we have to say no?  Think it can't happen?  Actually, my hunch is that it's possible but not exactly probable.  However, that probability frightens me.  So what I'm doing is shorting the market's index as insurance. Remember how fast Bear went down?

"Well, if the Fed is unable to support all of this, imagine how fast the whole system will collapse if it gets hit by several banks going under?  Essentially I - and this is just my opinion - don't believe all the so-called experts who claim that the economy is not 'that bad.'  I've found when they are swearing up and down how not-bad it is and how much better things are than whatever, that's exactly our signal to run for the hills. The first skin those experts want to save is their own investments.

"I've been operating in the financial sector a long time.  What I've learned is what these experts are already doing: Look out for yourself.  The only one who will do right by you in the market is you.  That's why I recommend everyone to think in terms of self-interest and with common economic and financial sense.

"I sincerely hope that I am wrong in my opinion."

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