This was a good week from both the perspective of strong new monetary remedies as well as economic indicators that the economy may be turning. On Monday, Mr. Geithner knocked one out of the park (market-wise) when he announced his plan to buy as much as $1 trillion of bad assets from banks and avoid nationalization. Bond fund giants Pimco and Blackrock and others say they will participate in the plan. Economic reports on housing and durable goods also added to the prospect that the fourth quarter’s slide of 6.3% might have been its worst.

Today, there is a strongly held belief that financial markets are efficient. The efficient market hypothesis maintains that prices of traded assets such as stocks, bonds, or property adequately reflect the sum of all known information at any given point in time. With today’s rapid flow of information, we see prices adjusting ever more quickly and with greater volatility. The hypothesis also asserts that it is impossible to consistently outperform the market by using any information the market already knows, except through luck. There are strong and passionate opinions on both sides of this hypothesis and it is not our goal to defend or to debunk them today. Rather we aim to point out that because of the widely held belief in market efficiency there are some exciting opportunities that have strong potential if we lengthen our timeframe beyond nest week or next year. We want you to know about them.

This afternoon we find the S&P 500 advancing for the fourth day, up nearly 12% for the week. News on Tuesday that Citigroup CEO Vikram Pandit’s remarks in an internal memo saying the bank is having its best quarter since 2007 and comments from regulators in Washington suggesting they may reinstate rules that limit short selling sparked the rally. By Wednesday it looked like it would run out of steam when Thursday’s Retail Sales report demonstrated there was still life in the consumer. The possibility that consumer, the largest part of the US economy combined with the picture Bernie Madoff swiftly and justly being escorted off to jail in handcuffs gave the market it’s second powerful boost upward. This week’s move dramatically demonstrates how fast markets can move on relatively little information.

The free enterprise system that made this country second to none on earth is in the cross-hairs of an increasingly out-of-touch Washington, D.C.  Frank, Dodd, Pelosi, Reich, Schrum, and others boldly, arrogantly, and endlessly flog the whole of in particular Wall Street and free-enterprise in general. As they continue, they risk dousing the spirit of risk-taking which drives our economy. If Mr. Obama places himself in the company of Abraham Lincoln he must better understand that the 16th President was a champion for the protection and nurture of the free enterprise energy of this country. In a famous speech in February of 1859, Mr. Lincoln the patent system “secured to the inventor, for a limited time, the exclusive use of his invention; and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.” Mr. Lincoln observed that the government was not the inventor, the creator, or the risk taker, but rather the protector of the free citizen; protected by this government to take risk in hopes of profit, not vice versa.