As the Great Credit Unwind began in earnest last summer, the very first thing I did was move all client cash from money-market funds that contained commercial paper to government money funds. See the link here: Money fund update. 

I've also avoided credit risk for the better part of 5 years, which has allowed me to not get run over by the credit-spread widening that has crucified so many "core fixed income" managers. I avoided the CDO’s, CLO’s, sub-prime, etc present on the balance sheet of so many broker/dealers and banks that are now either in trouble or are gone.

I even went so far as to identify which dealers and which banks were insolvent, and would either go under in either bankruptcy or forced marriages. Links to those pieces I wrote can be found below:

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• What Have You Done for Me Lately (a client missive)

So as you can see, I have put forth a lot of time and effort. But for what? I estimate that the interruptions and interventions just since July of this year have disturbed what used to be free markets, and may have cost my firm 10 to 15% in potential returns on our Harbor Pilot Fund (not that we're down 10 to 15%, just that we would have made 10-15% more). And this despite having gotten the macro-economic and company-specific calls correct.

Trust me, this isn't whining, as I do not allow whining in my household or office. It's frustration, pure and simple. With the introduction of the TARP (Troubled Asset Relief Program), "We the People" now have stakes in some of the worst banks on the planet. Oh joy. From the nationalization of Fannie and Freddie and the Fed’s rescue of AIG, it's sickening even to think of all the garbage we own.

Do I think any of this will work? Absolutely not. In fact, if anything, it has emboldened investors to reach out and buy the preferred stocks, hybrid securities and debt of the banks that should have failed in the first place.

Trust, me those folks will rue the day they did that, as I'm ready for TARP II, III, IV and V. Most folks I know are frightened to take risk because we never know what manipulation/ intervention/ intrusion lies ahead. And again, this sickens me, more than you can possibly imagine. I hope it sickens you, because it should.