The global financial crisis

Investors today face a dilemma. With the Dow still down 30% from its peak, top investors like Chuck Acre, Whitney Tilson, and Warren Buffett keep reminding us that stocks are cheap.

There are some gut-wrenching predictions floating around these days: Hundreds of banks may fail in the coming years.

Maybe you've heard this popular myth: A major cause of the financial
crisis was boneheaded Wall Street compensation packages unaligned with
shareholder interests.

It's not that the theory doesn't make sense. At first blush it makes
perfect sense. But when you look at the numbers, the simple-as-pie
thesis starts to break down.

Not long ago the prospect of a second Great Depression was on the table. The economy was hurting. The market had lost some 40% of its value. Things were bleak.

The Economist recently profiled a real estate
investor who bought a $6.2 million home in 2005 "on a whim." Today,
with high-end real estate following the rest of the market down the
toilet, things aren't going so hot.

You know the old Wall Street saying: "Buy the rumor, sell the news."

In casino land, the sentence requires a modest rewrite to say, "Buy
the rumor, ignore the news" to accommodate investors' desire for
anything positive from Macau to Las Vegas.

Remember all that talk about whether we were entering another Great
Depression? Much of it has subsided since the 40% rally in the S&P
500 and the sprouting of the economy's supposed "green shoots" (or, as
skeptics call them, "yellow weeds," "Venus flytraps," or "poison ivy
accidentally used as toilet paper").

I am always looking for a good deal, whether that means buying an extra
box of Golden Grahams when they're on sale or pouncing on undervalued
stocks. The idea that anybody would sell a stock for less than its
worth may seem silly, but legendary value investor Ben Graham (no
relation to the cereal) tells us, by way of allegory, how we can look out for these situations.

New York -- U.S. markets were flat Friday despite positive news from two large banks that have struggled throughout the financial crisis.