OK Howie, what happened to cause this mess? It's an interesting question.

Over the years people have accused me of researching issues, finding someone who agrees with me and then quoting that person.

Well, finding someone who is smarter than you, but someone who agrees with you, and then quoting them is brilliant. So this is what I think, and a guy named James F. Rothenberg, who is chairman and principal executive officer of the Capital Research and Management Co., wrote in a December letter. He did not get that job being stupid.

He and I think the market was fundamentally mispricing risk.

Go back and read that sentence again.

Now we could blame some people (it's more fun to do that), but the reality is, as far as I am concerned, that I have had the risk worry before.

When you are old like me, you can remember lots of things that were mispriced. I remember one time that I thought junk bonds were trading like they were quality paper. Sure enough the junk bond market blew up and yields changed dramatically. We had mispriced junk bonds.

Remember back in 2000? Remember how the Internet stocks were trading? Remember what happened?

The market had mispriced risk once again.

This time, in 2008, it didn't take a couple of years to reprice things and that is why it really hurt. I mean it took days didn't it? I mean one week in October the market was down 18 percent.

This time it was leverage and subprime loans. The hedge fund boys and girls, and others, had levered up, borrowed money and bought bad loans. If you lever up and buy something bad, then that something bad goes bad, the result is somewhat less than satisfactory. So now you know.

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Now let us examine what happened in the stock markets in 2008. Any numbers I use, of course, are measured from Jan. 1, 2008, through Dec. 31. We will look at things from how badly a market or index performed to how well some things might have done.

Emerging markets — generally those from developing nations — were down an average of 54 percent, the Dow Jones Global Index, not including the United States, was down 46 percent. The Investor's Business Daily Mutual Fund Index was down 43 percent.

I should stop this, but I'll continue.

The NASDAQ Composite was down 40 percent, the Standard and Poor's 500 was down 38 percent. The S&P MidCap Index was down 37 percent, the Russell 2000 Index of small companies was down 34 percent.

The Dow Jones Industrial Average of 30 stocks was down 33 percent and the Wilshire 5000 was down 37 percent.

In the commodities area, copper was down 54 percent, corn down 12 percent and crude oil 54 percent.

Now a smattering of good news. If you owned gold, the dollar and some bonds, you might actually have had a positive return on those investments. Gold was up 6 percent, and the dollar was up 4 percent.

I have rounded off most of the numbers above to alleviate the pain and suffering.

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People ask me "Where are we going from here?" Well, I don't know any more than anyone else.

This is what I think: If we do not suffer any negative surprises or events over which we have no control, we might be OK.

I mean, I see some bankruptcies coming, but maybe we know all of that. We already know a bunch of stuff like the housing market is crappy, most retail is crappy, people are losing their jobs, people might be losing their homes.

I mean there are a lot of crappy things happening out there. Again, maybe we know that already. Maybe the markets know that.

It's possible that during the first quarter we might find out if everybody knows everything there is to know. Many times stock markets look far enough ahead that they begin acting well in advance of any economic improvement.

I think I am genetically predisposed to be optimistic, so there we are.

To contact me or to ask me a question you can e-mail me at Howie.Pentony@uvestfinancial.com or log onto www.thebank.com and click on Wealth Management.

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And finally, I made a slight error in judgment recently. I know, incredible isn't it?

I took my wife to my high school class reunion. This was not a good idea.

While we were there, she started staring at a drunken woman who was seated at a nearby table. She asked me, "Do you know that women?" I said, "That's my old girlfriend."

"I understand that she has been pretty much that way since I broke up with her 30 years ago," I continued.

"Amazing" said my wife, "Who would think a person could go on celebrating that long."

I don't think she's funny.