Just a few words of encouragement (borrowed from the permabulls) for all those upset or surprised by what happened today…

“There is a ton of cash on the sidelines.” - After today’s selling, there are at least 3 tons of cash on the sidelines. Does that make you feel better?

“Valuations are not so high.” - After today’s price declines, stocks are even cheaper on a fundamental basis - maybe only slightly higher than historical averages. Does that make you feel better?

“The Wall of Worry is great for stocks.” - After today’s selling, there is enough worry to build a really huge wall.  Does that make you feel better?

“Subprime is “largely contained.” - In his attempt to soothe the markets, Secretary Paulson said that on Bloomberg today and oh yeah, on March 13th he said the same thing. Permabulls have been saying similar things since February. Even execs at Bear Stearns and GE’s WMC made similar assurances. Does that make you feel better?

“Low interest rates are great for stocks.” - Largely due to a flight to quality, yields on the 10-year Treasury notes have dropped over 40 bps in 3 weeks. I see another 20-30 bps decline in rates as a decent possibility in the short term, especially if stocks keep getting whacked. Does that make you feel better?

“The low dollar is great for large caps, and by default the S&P 500.” - The USD index is at historical lows. If a low dollar is great for stocks, then today’s action is about as good as it can get. Does that make you feel better?

Of course, the pain of today is hard to heal so quickly. And having me throw this salt on the wounds may make it worse. But the next time we rally and you hear these crappy lines, please remember how today felt. The reminders may make you queasy then too, but it might actually help you avoid losing money. And that should definitely make you feel better.