Monday, September 15, 2008

The Day the Earth Stood Still

"Klaatu barada nikto."
- Michael Rennie to Patricia Neal in The Day the Earth Stood Still

The Day the Earth Stood Still was a film released in 1951. Like many sci-fi films, on the surface it appears to be about space aliens and ray guns, but there is a deeper story with an anti-war message.

The line delivered in the film is intended as instructions to the alien robot Gort to stop its assault on the military units surrounding the spaceship and to resuscitate (resurrect?) the character played by Rennie (shot and apparently killed in another scene) so he can deliver his speech in the closing scene.

In spite of the Crowned Heads of Wall Street working all weekend though, there is no resurrection for Lehman Brothers. Lehman began operations before the Civil War and had survived many other crises, but not this time. The government drew a line in the sand. Finally. There would be no taxpayer money backing any takeover of Lehman. Merrill Lynch saw the writing on the wall and quickly arranged a “merger” with Bank of America. That pretty much leaves only Goldman Sachs and Morgan Stanley as the last of the large, independent investment banks and rumors about their viability as independent entities abound.

So, is the earth standing still today? I don’t think so. Capitalism is doing what it does best: rewarding the winners and punishing the losers. The punishment taking place is obvious, but knowing who the winners will be is not so obvious.

What I do know though, is that the markets will recover. They always do. Now is not the time to bail. Stay invested, stay diversified.

Questions? kimm@sweetwaterinv.com

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