Supposing that your neighbors discovered the presence of environmental dangers in the area, but chose, instead of discussing and dealing with the problem, to talk up the price of your homes, and put out marketing stories in an effort to get someone else to buy your problem. That's something called Inflation and the Greater Fool Theory -- and the one to which most people are presently subscribing in capital markets.

Yes, just like house prices have been inflated for some time now, the financial markets are becoming so.

As you know, I have joined the capital markets bear crowd this year. After the Dow Industrials Average had tried unsuccessfully to break through about 10,700 in 3Q05, in the face of rising interest rates, I said that I was going to scale out of long positions and go mostly to cash.

Just as ex-Treasury Secretary and Goldman Sachs top executive Bob Rubin remarked in this week's Business Week article, and in his remarks at the Concord Coalition confab in November, there are very serious financial issues facing America. I see them, and I also see the efforts of others, including this Treasury Secretary John Snow, and his friends at CNBC, to have the public turn a blind eye.

I suspect if John Snow was not employed in the service of the President, he too might take a less upbeat view of today's situation. But his job is to communicate the platform and policies of the current U.S. Administration, which is a marketing and sales job. He is selling a brand, not unlike Procter & Gamble sells soap or other consumer products.

If traders are looking to John Snow for objective analysis of capital markets, then they are looking in the wrong place.

To Snow's credit, despite a low ranking of the President in most political polls, Americans happen to believe that, in terms of economic leadership, the President is winning. So, in October, after the Dow had bounced off a low of about 10,200 and started up to about 10,400, I said again that I was taking a pass because I thought the rally would be 2 pct to 3 pct, up to about 10,700. I was more concerned about the risks -- to the point I will now just buy the extreme dips.

I even said that the year-end rally conceivably could hit 11,000, which would have been a rally of almost 6 pct.

Here is my difficulty: if I really think a market price is going to move over +5 pct in less than eight weeks, I'll trade that move because that's a +30 pct annualized return, which is too much to ignore, either bull or bear.

So, I was almost a buyer of the rally I could see forming, and I thought about what the impact might be on the blog readers if I dropped from 80 pct cash to say 40 pct cash.

I decided not to do anything because (i) I wasn't at all sure the Dow could power through 10,700, and (ii) if I changed my posture, the average reader, who is here once a week or less, would get confused. So just like the U.S. Administration has a job in selling the President's platform, I decided to stick to mine.

Well, with respect to the Dow=11,000, we're almost there, and a funny thing is happening. Technical analysts are now splitting into two camps.

One camp " people like me who focus on technical indicators that are momentum based " are pointing out that the rally is almost over (any day or week now), but another camp " people who interpret trading patterns (things like flags, pennants, heads-and-shoulders and the like) " are pointing to the probable upside breakout from bullish rising wedge patterns for the S&P 500.

Anything can happen at this point. If the U.S. Administration decides to print an enormous increase of money supply, the year-end rally could extend above 11,000 in the near-term, but then I would accept that policy decision as the most imprudent one possible, and I would start preparing to buy puts acrooss the board in anticipation of a subsequent market crash.

As one of the Little People, I can only hope that people with the power choose to use it wisely, but history has shown that is not always the case.

Herein lies another dilemma for a blogger like me. I now feel like a John Snow wishing he could be Bob Rubin in the sense that I have to continue to write something that shows I am a consistent and thoughtful analyst and teacher, but there are times when I know as a trader I ought to do something opposite to what I preach.

The dilemma is one of time " just like after Bob Rubin (and Bill Clinton) departed the White House, he could speak in a different manner.

To wit: on Monday last week, I could see that major changes were underway in the gold and forex markets. I wrote about them, but I believed the moves would be sudden and short-lived so I did not alter my blog posture.

Regarding gold, I believed there could possibly be a retest of the $500 psychological level from a one-day rally high of $540, which could be a 7 pct to 8 pct pull back.

As I say, that is enough of a move that I like to trade it. But I didn't want to be in the position of writing one thing and doing another, or, worse, having you think I might be doing something different.

Now, with the pull back in the goldminer stocks, my blog portfolio is going to be considerably less of a performer than what it otherwise ought to have been.

So, after some thought about this, I have decided that in January I am going to drop the blog portfolio in favor of giving premium access to my personal portfolios. So if subscribers see me day trading, or buying and selling shares that occasionally differ in the near-term to what I am saying longer term, you will know that I am doing it for reasons I may not be able to blog about.

The problem here is quite obvious. The average reader is a passive investor of mutual funds and fixed income products. Those who are active are trying to gain some understanding, whether it is from others, or me, and many are occasional readers. Then there are readers who are professional traders or individuals who are full-time involved in some aspect of financial services, who have various reasons for reading.

I can't satisfy everybody, and even if that impossibility happened by miracle to become possible, what I do for readers of the blog would be different at times than the things I would do for me.

Blogging is an interesting phenomenon. It is definitely an interesting intellectual challenge as well as a non-political bully pulpit. Yes, there are times when I feel predisposed to venting my frustrations over shareholder rights issues, but the most fun I have is pushing the envelope related to using the Internet as a medium to trade and to communicate an education in how to trade.

To be effective at anything, you need to narrowly define your business model and not overly stress your resources. Then the longer you apply yourself to a small success; it will always become a bigger one.

With this blog, I clearly see what's working, and the more I push on those buttons, the more conflicted I become with my personal needs and wants. And if there is one thing I learned in my life and consequently preach to others is that conflict of interest is life's greatest curse.

To the extent you can eliminate conflict, the happier and more successful a person and organization you will be. I always joke that life would be pretty easy to figure out if people didn't keep getting in the way.

Of course, I am always talking about those people who have conflicting agendas.

That is so true that, when I first investigate opportunities, I always look for the conflicts. Bad people will try to hide conflicts; hoping through lack of transparency the "issues" will come out much later.

That's why I'm an advocate for total transparency in the financial services and capital market arenas.

And you will note that because of conflicts of interest, I separated financial services from capital markets in the paragraph above.

In any event, I need to start on the Week #50 in Review now.

As I sit down to look at global capital markets, and what happened this week, and what may the next, I just wanted to tell you what is on my mind.