I was just going through some old files trying to dig up some research and came across a commentary I wrote in June 2002 that talked about risk. The specific environment then definitely has some differences compared to now, but the overall theme to ignore risk is the same. Just a little fun reading...

Sitting on my desk is one of those daily tear-off calendars featuring the old Far Side Comic Strip. Today's cartoon shows a boy swinging on a rope swing suspended from a tree. The twist is that instead of a normal tree that grows say apples or oranges, this tree grows large, metal anvils. Beside the tree is what you presume to be the boy's mother with her hands on her hips scolding him. The caption below reads "All right, Billy, you just go right ahead!.I've warned you enough times about playing under the anvil tree!"

While this is clearly nothing more than a fanciful cartoon, it did make me stop and think about the current market conditions. In my mind, I see an alternative cartoon. In this, the average investor sits on the rope swing and on each anvil is written phrases like "outrageous price-to-earnings ratio", "terrorism", "world conflict", "liberal (to say the least!) accounting methods", "weak economic environment", etc., etc., etc.What is missing from the picture, however, is the scolding mother, the voice of caution. Instead, there is a herd of analysts urging the investor to stay on the rope swing. "Ignore the risks hanging just over your head. The market is already down big, it can't go much further. These little accounting snafus just give you a chance to buy once insanely priced companies at merely a historically high price. Companies hardly ever go all the way to zero!!!"

You get the idea. There is a whole lot of risk out there and not much in way of respect for it. This is just one of my periodic reminders to keep thinking critically about what you read and hear.

The Amex announced a new gold index today. It is called the Amex Gold Miners Index and trades under the ticker symbol GDM. More details can be found here.

Checking in on my list of 35 or so major sector Exchange Traded Funds (ETFs) underscores the downside bias as just two sectors are showing gains, and those are tenuous. Leading the downside charge is anything to do biotech/healthcare/drugs. (Note: The AMEX Gold Bugs Index (HUI) is also included in my list of ETFs because there is no ETF to properly represent the sector - yet.)

Top Five Performing Sector Exchange Traded Funds:

• Retail HOLDRS (RTH) = +0.23 percent
• Amex Gold Bug Index (HUI) = +0.27 percent
• Semiconductor HOLDRS (SMH) = -0.09 percent
• iShares DJ Consumer Cyclical (IYC) = -0.16 percent
• Regional Bank HOLDRS (RKH) = -0.17 percent

Bottom Five Performing Sector Exchange Traded Funds:

• Telecom HOLDRS (TTH) = -1.04 percent
• iShares NASDAQ Biotech Fund (IBB) = -1.61 percent
• iShares DJ Healthcare (IYH) = -2.24 percent
• Biotech HOLDRS (BBH) = -2.55 percent
• Pharmaceutical HOLDRS (PPH) = -2.95 percent

A Pfizer spokesman is currently on CNBC defending the safety of PFE's Celebrex. The stock is still down around five percent...

The indices keep slipping lower as the SPX just slipped to another session low. Note the daily chart below. We are getting close the 1130 level which marked a ceiling in September a floor this week...

Chart courtesy of ILX Systems