The May non-farm payroll jobs report was a disappointment. So much so that investors dumped stocks, convinced that because the country only added 54,000 jobs, the economy is kaput and we all headed for economic Armageddon. Now, doesn't that sound silly?

Let's get real folks. We didn't lose 300,000 jobs last month, which might have justified Friday morning's sell-off. Sure, economists were looking for a job gain of 100,000 plus but why should any one be surprised that unemployment is still above 9 percent given the slow growth rate of our economy?

Since the end of the recession, quarterly GDP has been at best erratic. Beginning with the third quarter of 2009, we have experienced the following string of quarterly numbers: 1.6, 5.0, 3.7, 1.7, 2.6, 3.1, 1.8 percent. All but one of those quarters have trended well below the normal economic recovery rates associated with the end of a recession. Is it any wonder that our unemployment rate bounces around while remaining inordinately high?

The spate of negative economic numbers we have been experiencing of late, in my opinion, has much more to do with the body blow Japan has taken from its earthquake and aftermath. After all, Japan is the second largest economy in the world and the fallout from its present recession impacts everyone.

As for the markets, I believe there are similarities between the April-August period of last year and what is happening today. At that time investors were concerned that we were falling back into a double dip recession. GDP for the second quarter of 2010 had dropped to 1.7 percent from 3.7 percent, while unemployment hovered at 10 percent.

The S&P 500 Index fell by over 16 percent. It was only after the Federal Reserve Bank announced the possibility of QE II that the markets recovered in August. Now the S&P is almost 300 points higher.

Last quarter's GDP growth rate was 1.8 percent down from 3.1 percent the quarter before and unemployment is 9.1 percent, up a smidgeon from last month. Unlike last year, however, we face the "end" of QE II in less than 30 days.

Readers may recall that I discounted a double-dip recession last year. I argued that we were in a slow growth recovery and should expect erratic and conflicting economic data into the foreseeable future. As long as the housing market remains in the doldrums, so will the economy. That argument still holds. At the same time, if the economy slows further, the Fed still has our back no matter how many QEs it takes.

What investors tend to forget is that we narrowly escaped a second worldwide Depression two years ago. While politicians, investors and taxpayers alike speechify about our government's huge deficit and wasteful spending, they should stop and ask why the deficit and spending is where it is today.

As a result of the financial crisis, the deleveraging of debt in the private sector was an absolute necessity. The only way to accomplish that, without driving the world over the brink, was for the government to take on that debt (deliberately leveraging the public sector balance sheet) while, at the same time, spending as much as possible to jump start the economy.

To date, that strategy has worked, although not as perfectly as certain textbook economists might have hoped. We have averted a Depression although this last Great Recession is not like any of the recessions we have experienced since the end of WW II. It is going to take time, effort and patience to unwind the financial tangle that our banks, brokers and insurance companies have created. We are on the right track, even if our path ahead is dimly lit. Expect the track to run through peaks and valleys, make sharp turns, and accelerate at times, while coasting at others. In the meantime, stay the course.

As I write this, the markets are wrestling with 1,300 on the S&P 500 Index, the bottom end of my projected range. Could the markets fall even further? Of course, they can. If we break 1,300, the next stop would be 1,250-1,275, still not the end of the world. From top to bottom that would be an 8 percent correction, after a 300-point rally over 11 months. I'll gladly accept that kind of pullback for a chance to rally up to 1,400 or above.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.

Readers should know by now that I'm a contrarian. The worse things seem to get, the more interested I become. Take Japan for example.

This island nation has suffered one economic bad spell after another for over 20 years. Japan is a depressing tale of economic and political mismanagement that has resulted in years of negative interest rates, a huge budget deficit, a stagnant economy, moribund stock market and a disillusioned and aging population. The massive earthquake and tsunami that triggered a nuclear disaster at a nuclear power plant in the eastern part of the country was seemingly the last straw that broke this country's back.

Japan is now officially in recession, which started in the last quarter of 2010, and has both widened and deepened thanks to these calamities of nature. Faced with enormous rebuilding costs, any effort to rein in the government's huge deficit looks hopeless. As a result, last week Moody's Investors Services placed Japan's government debt on review for a possible downgrade after changing its view in February from "stable" to "negative."

So why am I interested in investing in a country faced with this unending list of woes?

After two decades of lackluster efforts to revive the domestic economy, a new approach has been forced on the nation's leaders, thanks to the earthquake and tsunami. An enormous re-building of parts of the economy has to be undertaken, similar to the kind of reconstruction Japan undertook after World War II. Experts estimate it will cost $200 billion to $300 billion.

Japanese corporations need to increase their capital expenditures in order to regain lost capacity as well as to invest in improving their supply chain operations against a repeat of this kind of disaster. In addition, they will spend more money on earthquake proofing existing factories and office buildings and acquiring alternate power sources. This could add another $150 billion to $200 billion to national spending.

Aside from all the spending that is beginning in the near future, the government will maintain its extremely loose monetary policy. Interest rates will remain at 0 percent for the foreseeable future. At the same time, the yen is expected to decline as investors shy away from bonds that are rated "negative" by Moody's and an economy that is in recession.

To my way of thinking, here is an economy that is on the eve of a massive stimulus program, a declining currency (good for increasing exports), a corporate sector hell-bent on increasing capacity and re-gaining global market share (think autos) and a population that is willing to finance the effort regardless of Moody's outlook on their bonds. In the eastern region, new housing (unlike the U.S.) is in great demand. And unlike our own financial institutions that refuse to lend despite low interest rates, Japan's banks will lend and lend to corporations and individuals in order to help the recovery effort.

What this indicates to me is that a V-shaped economic recovery in Japan is a strong possibility. If I'm right, the stock market is a screaming buy.

Over the longer term this particular set of economic variables may actually pull the country out of its decadeslong deflationary quagmire. Japan as a nation needs to spend again, build again and buy again. Up until now, there hasn't been the will or a really compelling reason to do so. Now, whether you call it divine intervention or simply the flip side of a bad set of circumstances, Japan has its mojo back. It may take a few years before all of the above unfolds, but I think we are on the cusp of dramatic change within this country. Remember, you heard it here first, folks.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.

Investors are worried. They are worried that the end of QE II will spell disaster. They are worried that European bank woes will spill over onto our shores. They are worried that the economy is stalling and inflation is trending higher. Yet, with all these worries, the markets have held their own over the last few weeks.

I'm not going to dismiss these concerns, although we need to remember that markets often climb a wall of worry. Admittedly, there have been so many downgrades of sovereign debt lately that it's hard to keep track. The PIGS (Portugal, Ireland, Greece, and Spain) have had to make room this week for Japan. That island nation joined the ranks of downgrades in large part due to the economic impacts of the recent earthquake and tsunami.

The governments of the PIGS countries, in the meantime, have responded by implementing austerity measures, hiking taxes and selling off state assets.

These belt-tightening policies have not had the desirable effect either in the economic or in the sociopolitical arena. Anger and fear among the population have spawned demonstrations, strikes and political upheaval.

"Just say no," has been the message of various opposition parties within the region.

The voters are listening. Spain's Socialist Party, for example, was hammered in recent elections. Ireland kicked out its prime minister, Greece's opposition parties are making it impossible for the government to make deeper austerity cuts and demonstrations have replaced dancing as a national pastime.

Although "no" sounds good, especially to the youth, it unfortunately provides little in the way of solutions to the PIGS financial crisis. But regime change (or the threat of one) has made ruling parties drag their heels in implementing reform. In the meantime, the debt continues to pile up and the financially sound countries within the EU are becoming increasingly impatient.

Readers may recall that I expressed serious doubts over a year ago when the EU first announced that in exchange for a bailout, the PIGS would need to agree to stringent spending cuts and higher taxes. My hesitation stems from a similar debt crisis I experienced in Latin America during the 1980s.

At that time, it was the International Monetary Fund (IMF) that was calling the shots. The same deal was foisted on countries throughout Latin America. All that effort accomplished was massive unemployment, a rapid decline in economic activity and a whole bunch of socialist revolutions from one end of the continent to the other. We called that period the "Lost Decade."

In the end, when the problem threatened to topple some of our own banks, we did what had to be done. We swapped debt for equity at 10 cents on the dollar. We also forgave a lot more debt than we swapped and, as a result, we have the Latin America we have today—dynamic, entrepreneurial and growing far faster than most regions. God forbid, that today's brilliant economists and politicians learn a lesson from the Lost Decade!

As for the rest of these worries, I'll handle them in order: the end of QE II at the end of June will be a nonevent. The Fed has our back and will continue to have it. Europe's woes will be contained, most likely by allowing some countries to re-negotiate their debt along the lines I have suggested. The "DD" (double dip) won’t happen this year and inflation expectations will begin to decline as investors realize the peak in the commodity bubble has come and gone.

So that leaves a market that is down less than 5 percent from its highs. Recall that I expected a pullback into the 1,300 to 1,325 range on the S&P 500 Index. Well, we dropped to 1,311 this week and in my opinion we are scraping along the bottom. So quit worrying.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.

Did you know that congressmen and senators consistently outperform the stock market year after year? On average, the lower house members beat the market by about 6 percent a year while those of the higher chamber wrack up a 10 percent level of outperformance annually. Now, if you believe that's purely coincidental, well, I have a bridge I can sell you cheap.

Don't take my word for it. Four university researchers from four different schools poured over 16,000 stock buys and sells of 300 congressmen over a 16-year period and found "significant positive abnormal returns." Five years ago, the same team uncovered even better results when investigating the personal stock transactions of Senators.

As a full-time portfolio manager myself, I know managing money is a 24/7 job that requires an enormous amount of research, experience and time. How can our politicians manage to pull out these startling returns year after year, while serving in Washington, running election campaigns and travelling back home to their constituents?

The university report speculates (without forming a conclusion) that the out performance may have something to do with the ability of members of both houses to trade on non-public information or worse, vote their own pocketbooks.

But wait, how can that be? Isn't trading on insider information illegal?

Well, it turns out that our lawmakers are excluded from the same insider trading rules that have nailed so many Wall Street traders, most recently in The Galleon Insider Trading Case.

Just think how much potential for abnormal profits resides in knowing what bills and appropriations will pass and those that won't. If, for example, a huge contract is awarded to one of our defense companies in a non-public appropriations bill, a member of either house could legally buy the stock ahead of time and even tip off friends, family and possibly their largest campaign contributors.

It may also explain how certain big financial institutions, over the last few years, seem to know exactly how bad or good the country's economic data will be prior to public release. That data has been capable of moving markets substantially either up or down over short periods of time.

Given the U.S. government’s massive intervention in the financial system since 2008, the ability to make piles of money from government actions is immense. Is it any wonder that politicians have adroitly avoided changing the rules that govern their own actions, until now?

A bill introduced by Reps. Louise Slaughter, D-N.Y., and Tim Walz, D-Minn., called the STOCK (Stop Trading on Congressional Knowledge) act was reintroduced in March of this year. It was first introduced in 2006 and predictably went nowhere. The act would "prohibit Members of Congress and federal employees from profiting from nonpublic information they obtain via their official positions, and require greater oversight of the growing 'political intelligence' industry."

"As it stands today, neither members of Congress nor their staff can be held legally accountable for making personal investment decisions based on non-public information," explains Congresswomen Slaughter, "Even more troubling is that unregistered firms might be using Congressional non-public information to make financial transactions at the expense of the average investor. The bill places those individuals under insider trading rules and enhanced disclosure rules."

The act would prevent government employees from disclosing non-public information to anyone if they believe it will be used to buy or sell stocks, bonds or commodities futures. It would also require members of Congress and employees to report the purchase, sale or exchange of securities in excess of $1,000 within 30 days.

"This is a matter of equality under the law," said Congressman Walz, "The same standards we have established for Wall Street should apply to Congress. The potential for abuse is obvious and troubling and there is simply no good reason Congress should get to play by a separate set of rules in the stock market."

Readers may agree that there is something hypocritical about politicians and regulators probing hedge funds for suspicious trading while the very same government officials are able to trade on nonpublic information on current and upcoming congressional activity and give it to their friends as well as hedge funds if they choose.

While I applaud the efforts of Walz and Slaughter, I suspect the chances of STOCK's passage is about as remote as my growing hair again.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.

Volume was thin, volatility high, and despite all the excitement over the LinkedIn IPO, the averages finished little changed from the levels of last week. This is a market that requires patience and fortitude.

By now, you probably have had your fill of LinkedIn stories. For those who haven't caught up, all you need to know is that the professional networking company went public on Thursday at $45 a share and proceeded to more than double by the end of the day. It now has a valuation greater than one-third of the companies that make up the S&P 500 Index, making billionaires of its founder and many of its staff.

A few analysts expect LinkedIn's IPO to be just a taste of things to come. The big four in this space - Facebook, Groupon, Twitter and Zynga - haven't set a date for accessing the public markets but are all making noises that suggest future IPOs. Some hope that LinkedIn will revitalize the IPO market, which has been lackluster at best so far this year.

Other analysts fret that the overnight $9 billion market capitalization of LinkedIn is reminiscent of the companies that went public during the Dot-Com boom. And we all know how that turned out. I suspect that, like the stock market in general, the price action of LinkedIn simply reflects the fact that too much money is chasing too few investments led by the "hot money" folks who have abandoned commodities and are looking for the next big play.

At some point, rational behavior will prevail and LinkedIn will trade at a valuation that will better reflect its fundamentals. Until then, I will watch the show from the sidelines.

As for commodities, the prices of silver, gold, grains and base metals are trading like yo-yos in the hands of elephants. In the energy space, oil is fast closing in on $95 a barrel. Don't try to be a hero and trade these price movements. Leave that to the professionals, who, by the way, are losing as much as they're making in these markets. There will come a time when commodities finish falling. Usually, prices will tend to flatten out and volumes dry up at the bottom. That will be the time to look at these investments once again.

In the meantime, the dollar's strength is hurting U.S. stocks as is Euroland's continued difficulties with the PIGS economies. Friday it was the turn of the Greeks, whose sovereign debt rating was reduced further to "B-plus, highly speculative." It appears that default is inevitable for Greece, (something I predicted would happen over a year ago). The trick will be to engineer a default without actually labeling it as such, something bankers and politicians are quite adept at doing after the last few years.

As for the markets, they remain in up trends. The "sell in May and go away" crowd would have you abandon the markets until October. Although the May Play works some of the time, I don't believe this year will be one of them. Stick with the markets and have patience.

Any references to specific securities are for illustrative purposes only and were selected based on a non-performance based criteria. The performance of the securities listed is not discussed and Berkshire maintains a listing of all recommendations for the preceding year and makes it available to the SEC upon request. The securities identified and described do not represent all of the securities purchased, sold, or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.