Delphic pronouncements like J.P. Morgan's "It will fluctuate" survive the test of time best. Seemingly useless, it should be dusted off occasionally, for example when VIX (volatility) was scraping the low 10's for months on end. I dedicate it to all correlation traders. Another favourite comes from the collective wisdom of the Street: "Don't confuse brains with a bull market"; I dedicate it to the financier who bragged earlier this year of being so successful he could raise tens of billions at the snap of his fingers. For him, and other hombres at Rancho Liquid Leverage, I will throw in a slight modification of my own: "Don't confuse credit with liquidity".
"Caveat emptor" (buyer beware) is thoughtfully offered to buyers of credit insurance, particularly CDS. For further elaboration please apply to Mr. Buffet and his brand-new credit insurance monoline. To sub-prime borrowers and lenders alike, a quote from Hamlet: "Neither a borrower nor a lender be; for loan oft loses both itself and friend".
For the embattled rating agencies, also from Hamlet: "To B, or not to B, that is the question". To the ex-heads of Citi and Merrill, from Benjamin Franklin: "Drive thy business or it will drive thee".
To the financial engineers who dreamt up all sorts of statistically-driven structured finance products like CDOs, CPDOs, CLOs, etc: "There are three kinds of lies: lies, damn lies and statistics", by Benjamin Disraeli. To their clients, from Bob Sarnoff: "Finance is the art of passing money from hand to hand until it finally disappears".
All right, then, how about 2008? As the Italians say, make me a prophet and I will make you rich. I am neither Italian nor Prophet, but this dictum comes from Cicero who is a sort of Italian and his sayings have lasted far longer than any portfolio prophet: "Endless money forms the sinews of war". Obviously, to Mr. Bernanke.
Finally, since this is, after all, a public version of a daily journal, to myself: "It is not advisable to venture unsolicited opinions. You should spare yourself the embarrassing discovery of their exact value to your listener" (Ayn Rand). Come to think of it, given the provenance, it is quite apropos for Mr. Greenspan as well.
A Happy New Year to all, filled with love from your family and friends.