The biggest percentage gainer in the market today will be Unica (UNCA) which is being acquired by IBM for a 120% premium. I bring this up because the company was founded by Yuchun Lee in 1992. Mr. Lee was part of the MIT blackjack team called the "Amphibians" and the focus of the movie "21." That team won more than $5.0 million using techniques to monitor the flow of cards, something akin to card counting but slightly different. In the movie, the team frequently flew into Vegas and for the most part won big time but in real life it wasn't that way at all. In an interview with the Boston Business Journal two years ago Mr. Lee was asked: what lessons did you take away from the MIT blackjack team?

His answer:

"The concept of short term and long term. It was very hard when the team would go to Vegas and lose a lot of money. But if you can stomach the short-term volatility and not let it bother you, you'll usually benefit in the long term. I see a lot of parallels to this in the market and the economy today. I'm a long-term kind of guy"

I had two prospects comment on the actions of a couple of ideas this week to voice concerns about the Hotline service. It is so preposterous and mostly a form of procrastination but it also reflects the absurd expectations for investing. Investing in the market is tougher than it used to be in large part because investors have turned the market into a slot machine. A stock gets hit with the broad market and it's a bad investment and must be sold. That will enhance volatility not mitigate it. This has gone on a long time. If people ever looked under the hood of their investments they would pause more often to consider value rather than allowing the knee-jerk actions of crowds make that determination for them.

The right mindset is "when can I buy the dip?" which is different than that fanciful notion you're going to pick the absolute bottom because you're not. We are coming to the end of another earnings period and clear winners have been identified. Some were declared by the initial reaction and some saw their shares move lower even as they took market share and expanded margins. This doesn't have to be a roll of the dice but it requires focus on the long term. Taking hits are part of the game but taking unnecessary hits is self destructive.

Greats Grapple

We watched two former greats grapple for that old magic and in the end, though they didn't return to their peak, they felt better about how the day ended. I'm referring to Tiger Woods and the stock market. Tiger of course has only recently fallen off but it's been so swift and brutal that there is a feeling he will never be the same. Stocks on the other hand have been the walking dead so long it's hard to convince some people they were ever great. It's like some kind of urban myth to anyone under the age of 30 that the stock market was once hot and it is a living nightmare to anyone over 30 that it actual was. As for Tiger, I'd like to see him in the hunt again but if I had a choice I'd root more for NASDAQ to get back to 5,000.

This week, the self described 99ers marched on Wall Street to demand unemployment benefits beyond 99-weeks. The event was put together by the most dangerous threat to capitalism ever- the unemployed union organizer. As much as my heart goes out to anyone unable to pay their bills, this is the trap I've dreaded for a long time. People demanding crumbs is the worst trap any human can find themselves in and yet millions are there and more could be on the way. Why these people didn't march on the White House would be a mystery if we didn't know the real deal. The 99ers weren't demanding jobs just money.

Ostensibly they say the money should come from Wall Street, how they connect those dots, I don't know. Right now there are more than 1.4 million people out of work more than 99 weeks. Their skills are fading and desire crumbling but if they use their small reservoir of fight to demand more unemployment checks then they are giving up more than just their dignity. I know what it's like to be broke and afraid. I also know what it's like to live off crumbs and I've seen too many people adjust their lives around that kind of money rather than adjusting their lives around greater ambition.

Politicians are pushing for another extension as well as a $250.00 one-time check to seniors shut out of cost of living adjustments this year (hey there is no inflation). We passed a bill to pay teacher salaries by promising to cut food stamp payouts and taxing businesses and it's still going to add to the debt pile.

By the way that HUD program to help certain homeowners could eventually spread to millions of homeowners. Here are the criteria for a $50,000 "bridge loan" zero interest, non-recourse, and subordinate:

> 3 months+ delinquent
> reasonable likelihood of repaying within two years
> mortgage on principal residence
> good payment record prior to reduction of income

I can say one thing, this is going to be expensive as I believe more than half these loans will not be paid back in two years. Plus, this could easily swell from a $1.0 billion program to $10.0 billion, $20.0 billion or even more.

Economic Data

Retail Sales

Breaking a two month string of declines, retail sales (both including and excluding auto sales) improved compared to the previous month. The Commerce Department says sales rose 0.4% last month while sales excluding autos were up 0.2%. Both figures were slightly below expectations. The strength was concentrated in high sales of autos and gasoline, while most other retailers saw their sales fall during the month.

A rebound in auto sales, helped in part by incentives, was a source of strength in today's report. Demand at auto dealers rose 1.6%, following a 1.3% decrease in June. Excluding autos, sales of building materials, furniture, clothing, appliances and general merchandise all declined.

Gasoline station sales rose 2.3%, today's report showed. The data aren't adjusted for inflation and the average cost of a gallon of regular gasoline was little changed at $2.73 in July from the prior month, according to figures from AAA. Excluding autos, gasoline and building materials, sales dropped in July after a 0.3% rise in June.

CPI

CPI for July showed a 0.3% increase, falling in line with the consensus estimate. "Core" CPI which excludes volatile food and energy increased by 0.1%, also falling in line with estimates. The increase to CPI comes after three straight months of declines that had economists beginning to worry about depression-style deflation. For the headline number, a reversal in energy caused the index to go positive. There was also a 0.6% increase in apparel and a slight decrease in food and beverage.

Today's number brings some solace for the deflation concerns, but also is not a big enough jump to begin inflation panic talk (sometimes it seems like the pundits are afraid of both deflation and inflation at the same time). The increase is also not big enough to get the Fed to start thinking about re-raising rates. At least, this number will let us take one more thing off our minds... for now.