Where is the leadership in this market? I'm not sure there is any, and this isn't good for stocks.

With the possible exception of Exxon Mobil and Caterpillar, virtually every Dow stock is down. Some have been down for years.

Take the venerable General Electric. Many view this company as one of the best managed firms in the world. Great. Isn't that wonderful!?

Of course, the stock has been going down for years.

From the third quarter of 2000, General Electric's stock price dropped from a peak of about $60 per share to about $25 per share in early 2003. Over the last couple of years, the stock recovered to the $35 per share range, and, in recent months, it has drifted down to a new 52-week low between $32 and $34 per share.

So, the point is that if a company like General Electric can't make money for long-term investors, this market is in trouble. Frankly, we think this one example is representative of many large-cap, global American companies that just aren't providing much in the way of returns to investors. Wealth creation from traditional blue- chip companies is now the exception, not the rule.

Accordingly, you have to look inward. Mid- and smaller-cap companies with domestic operations offer the best investment opportunities in this market. Of course, there are exceptions (like our enthusiasm for Luxottica Group S.p.A.), but, generally speaking, you want to own companies with most of their operations at home.

If you are an investor with money to speculate in this market, look to those companies that have already done well on the market. That is to mean those stocks experiencing high relative strength. Success breads success, and, in this environment, you aren't going to get any help from the broader market.