Here is some thought provoking reading that has inspired a few sequels this weekend. It started with the following from Fortune’s Andy Serwer and what I get out of this first article is something I learned from Anthony Robbins last month. It has to do with focusing on what is really going on in the markets in the now moment, not how bad or good things can possibly be. It’s easy to decide that things are never going to get better based on what is going on in the markets now. Just as it was easy to be seduced by the notion that the Dow as going to 20k in the late 90’s. If you stay in either camp to long, you could miss the opportunities that will eventually present themselves just around the corner.

I’m not suggesting that because sentiment is so awful now to go out and load the boat on the long side as things could possibly get worse, and most likely will. I’m saying that when the tide does turn, be open to that possibility and position yourself accordingly.

This Crises Could Have a Happy Ending

I remember talking to a wise man at the end of the last decade who was pointing out to me how much the market had gone up during the 1990s and how stocks couldn’t possibly continue to go up at that rate. The market’s historical annual mean gain is about 8%, and yet between 1990 and 2000 the market had climbed some 15% per annum.

There is only one way to revert to the mean, the wise man pointed out, and that is for the market to go up less than that for quite some time. So we were looking at low single digit gains – or worse – for years.

That post inspired VC Fred Wilson to write this.

A Lost Decade – But Not For Everybody

When I think about what’s really going on in this “lost decade” it occurs to me that we are finally witnessing the impact of the end of the industrial era and the emergence of the information era. That’s not to say every “information stock” has done well. Intel and Microsoft have been a disaster. IBM and HP are down for the decade to date. But we also have to realize that the late 90s drove all information stocks up to crazy levels in anticipation of exactly this shift taking place. The market got it right, but as usual it overshot.

This brings us to Howard Lindzon’s reaction to both of these posts. I find his writing to be extremely entertaining and intelligent at the same time, which is a rare combination and completely appreciated.

Has It Really Been a Lost Decade in the Stock Market?

If WE are to learn one thing from the ‘Lost Decade’ of S&P, Nasdaq and Dow returns is that any idiot can make money in an up market. It is the down markets that separate the winners and losers. Averaging down (something even I have done a few times this year to painful losses) only needs to backfire once. The year 2008 is the ‘ONCE’.

It’s time to shake it off, sell your losers that are not coming back and wait. Over time, supply will shrink, the weak will go to zero and you will be left with a stock market of strong companies with great balance sheets that will be underowned. They will be underowned because 95 percent of the investing public will own reorganized airlines, banks, and auto companies. Don’t be one of them.