• I'm off to hear Courtney Robinson tell all.

Thanks for reading my Diary today.

I am outta here in order to prepare for The Bachelor's Courtney Robertson, who faces the wrath of the rejected during the Women Tell All Special tonight.

Enjoy your evening.

• A number of my portfolio positions will be making presentations this week.

Tomorrow, E*Trade (ETFC), Home Depot (HD) and Lowe's (LOW) will appear at the Raymond James Institutional Investors Conference, and magicJack VocalTec (CALL) will be at Oppenheimer's Cloud Computing Conference.

On Wednesday Regal Entertainment (RGC) will be at Raymond James' conference, Brocade (BRCD) will appear at the ISI Enterprise Infrastructure Forum, Legg Mason (LM), and American Express (AXP) and Waddell & Reed (WDR) will be at Citigroup's Financial Services Conference.

On Thursday, Brocade will appear at the Wedbush Technology, Media & Telecomm Conference, eBay (EBAY) will be at Bank of America Merrill Lynch ASEAN Stars Conference, ExxonMobil (XOM) will hold its analysts meeting, PNC Financial (PNC) will be at Citigroup's Financial Service Conference, and Disney (DIS) will be at the Media Summit.

• I added to the common today, and I purchased April and July out-of-the-money calls.

Nice mush on PepsiCo (PEP) from The Divine Ms. M.

I added to the common today -- it's now my third-largest individual equity position -- and I purchased April and July out-of-the-money calls.

Besides the historically low valuation, my feeling is that investors (and maybe even the Board) are growing impatient about the share price and company performance.

Indra Nooyi became President in May 2001 and Chairman in May 2007.

Here is how the shares have performed since 2001.

In my view, a change at the top would be welcomed by the investment community.

• The economic data this morning continues to be supportive of my bond short.

I added to ProShares UltraShort Lehman 20+ Fund (TBT) and TBT calls (September) today.  

The February ISM services index came in at 57.3, compared to consensus of 56 and January's read of 56.8. This was the best print in a year and compares favorably to its long-term average of about 54. Taken in isolation, the ISM report is indicative of about a 3.5% real GDP rate.

New orders (61.2) were the best in 12 months and well above January's 59.4 and the six-month average of 56.5. Backlogs were similarly strong at 53 (up 3.5 from January) and its six-month average of 48.1.  Employment came at 55.7 compared with a six-month average of 52.2 and almost 7 points ahead of its long-term average. (If you combine January and February's jobs component, it is at its best level in six years!

January factory orders dropped 1% but were slightly above the forecast of -1.5%. (December was revised up quite a bit.)

• Check out this weekend's Barron's.

I was interviewed by Alan Abelson in Barron's this weekend on the market and on my American Express (AXP) short.

And Andrew Barry had some good support for my AXP short based on a lengthy column he wrote about the competitive threat of JPMorgan (JPM).

• Pay attention to Mr. Market's history, or it could be, 'One, two, three strikes, you're out, at the old ball game!' 

Take me out to the ball game,

Take me out with the crowd.

Buy me some peanuts and cracker jack,

I don't care if I never get back,

Let me root, root, root for the home team,

If they don't win it's a shame.

For it's one, two, three strikes, you're out,

At the old ball game.

-- Jack Norworth, "Take Me Out to the Ball Game"

I have learned over my career that history is instructive -- it rarely repeats itself, but it often rhymes.

That said, we must all recognize that the past is not immutable.

Back in the summer of 2007 -- just before all hell was about to break loose -- I penned a column entitled "Take Me Out to the Ball Game for a Sense of History."

Since today marks the beginning of Major League Baseball's spring training, I wanted to repeat the essence of that column from nearly five years ago, which has some bearing on today's markets.

As a cousin to Sandy Koufax, I grew up immersed in the game of baseball. I watched numerous games with my grandfather, Harry Koufax (Grandma Koufax's husband!) at his home in Mount Vernon, New York. I used to watch the peaceful look in Grandpa Koufax's eyes when he sat watching the games in his big cushy chair, cigar in mouth. I have never forgotten that look: He was in baseball heaven. I think I have that same look today when I watch ball games. It's a look of contentment.

It wasn't only the Koufax Konnection that drew me to baseball; it was the purity of the game. Baseball is an un-timed contest. The home run records, perfect games, the tar on the bats, the spit in the mitts all combined to create an almost genteel tradition among today's sports.

And that song. "Take Me Out to the Ball Game" is played during the seventh-inning stretch of every Major League Baseball game, with Harry Caray getting the credit for singing it first at a ball game in 1971. Call me sentimental or old-fashioned, but to this day, every time I am at a baseball game and I hear "Take Me Out to the Ball Game," I well up in tears.

When I think of the game of baseball, the first thing that comes to my mind is a sense of historical perspective -- a respect for Roger Maris's (non-steroid-aided) record 61 home runs in one season (1961), Hank Aaron's 755 career home runs, Pete Rose's 4,256 hits, Joe DiMaggio's 56 consecutive games with a hit and Nolan Ryan's six no-hitters and 5,714 strikeouts.

Back in 2007, I got teary eyed at the tribute to Willie Mays, the Say Hey Kid, at that year's All-Star Game. Perhaps it was that respect for baseball's traditions. Or perhaps it was a sense of a historical perspective, like when Sandy Koufax refused to pitch Game 1 of the 1965 World Series because the game fell on Yom Kippur, the Jewish Day of Atonement.

Where have you gone, Joe DiMaggio?

A nation turns its lonely eyes to you.

--Simon and Garfunkel, "Mrs. Robinson"

It is the same perspective and respect and sense of history that seems to be missing in the analysis of today's stock market by many of its participants -- most of whom, in the mounting competitive landscape (and given the outsized remuneration in the management) of hedge funds, invest/trade at the altar of momentum.

Yer blind, ump,

Yer blind, ump,

You must be out of yer mind, ump.

-- Damn Yankees, "Six Months Out of Every Year"

To some degree, fear and doubt has been driven from Wall Street today.

Certainly in 2007, the line between domestic economic progress and reality became almost completely blurred. But, as was the case four and a half years ago, there is no negativity bubble today but rather a bubble in complacency and in economic and stock market extrapolation.

One would have thought that lessons would have been learned by the unthinking speculation of daytraders in the U.S. equity market in the late 1990s, which resulted in a 70%-plus schmeissing of the Nasdaq or in the horrendous stock market during the two-year period following my original column in 2007. But nothing has been learned. The same mistakes are being made over and over. Other errata -- such as marking to market (collateralized debt obligations), trusting credit agencies (remember Enron, Tyco, etc.?), the use of margin debt (in 2007 at record levels) or even the buying of the crap that Wall Street packaged (again, collateralized debt obligations) -- will be buried and lost to history, and I guarantee that these mistakes will be repeated in the future.

The availability and price of credit in 2005-2007 facilitated the housing bubble, which in turn followed the technology and Internet bubble of 13 years ago. It was a bubble that fed the private-equity boom and that, for a period of time, created a put under the market, which served to reduce fear and produced the aforementioned bubble in optimism (and the concomitant use of leverage, such as the carry trade, by hedge funds and the aggressive use of debt worldwide).

I began writing and warning about the tip of the iceberg of credit on this site -- namely, subprime lending -- back in 2006, when the ABX BBB was trading at par; it ultimately fell close to zero. Back then, as the deterioration in subslime began to spread, talking heads in the media grew bored of the subject and swept it under the lending rug, dismissing its possible impact on our markets and the domestic economy.

For a while, credit spreads were contained and locked in a narrow range -- surprising, considering how levered segments of our economy were, particularly at the consumer level -- but the spreads eventually bottomed and, in the fullness of time, widened to levels never thought possible. In turn, the housing market experienced its roughest patch in history -- home prices have dropped 35% since -- and the residential market's credit contagion grew and was not contained to subslime; it infected all the debt markets. In time, the drop in housing activity accelerated -- it has only now begun to stabilize in 2012 -- and there was a pernicious impact on operating results on the entire spectrum of America's companies (especially of a banking kind).

And the Great Recession of 2008-2009 came to pass.

In time, the loose lending of 2000-2006 moved well beyond the subslime mess and into motorcycle, automobile and credit card securitizations by 2007. And, as I predicted, it spread further to every town in the U.S. (and many abroad) populated by merchants ("Furniture World," "Textile World," "Cell Phone World," etc.) that had encouraged the consumption binge (buy now and pay later!).

The crack in the foundation of credit began to gain speed as the lending community grew more circumspect, and, in time, credit grew ever sparser.

The credit crisis was born, and the Great Recession moved speedily toward its height.

For a while in 2007-2008, with the pressure on, the quality of corporate profits and elevated profit margins were dismissed as companies influenced by activist shareholders would mask the evolving headwinds with share buybacks, which, in the fullness of time, served to leverage the one relatively remaining healthy sector: American business's balance sheet. (Look back at the prices that General Electric (GE) and Hewlett-Packard (HPQ) paid for their shares in buyback programs back then. It will make you sick! GE and Hewlett-Packard shareholders suffered the hangover effect of the poorly timed buybacks!)

As legendary hedge fund manager Michael Steinhardt said in a 2007 interview with HedgeFolios, "As expected, once companies are faced with having to discuss their quarterly performance, we get a new round of share repurchase announcements." He pointed to Sears Holdings (SHLD), which lost more than 7% after it came out with a warning that "almost halves the analyst estimate for earnings and magically a $1 billion increase in its buyback is announced.... Clearly, not every buyback is being used to cover for operational deficiencies, but when a company is struggling to sell products at good margins, that should be more important than a decline in share counts."

Another legend -- this one of a baseball kind -- pitcher Satchel Paige once said, "Age is a case of mind over matter. If you don't mind, it don't matter." As I wrote in 2007, for a while, the metamorphosis of the credit cycle was ignored: Investors didn't mind -- stocks had risen in 15 out of the last 18 months. Market participants, however, ultimately got a lesson in history.

In retrospect, the 2007 economy (discussed in my old column) and the leveraged foundation of the markets' dominant investors (hedge funds) represented nothing more than a house of cards. And I don't mean baseball cards!

Joltin Joe' has left and gone away?

Hey hey hey, hey hey hey.

-- Simon and Garfunkel, "Mrs. Robinson"

My advice? Similar to Major League Baseball records, be mindful and respectful of the history of credit and stock market cycles.

This certainly does not mean that anything close to an economic Armageddon or stock market crash lies ahead (similar to what occurred in 2008-2009); it does mean that the economic ride will be increasingly lumpy and that the stock market ride will become increasingly bumpy.

Similar to 2007, in 2012 the era of free and easy money is coming to a close at the same time as our recovery is growing increasingly fragile.

But 2012 doesn't rhyme with 2007 - it's different this time, with secular challenges that present unique headwinds to a self-sustaining domestic economic recovery.

Consider that today's challenges, in some ways, are more problematic than those that were encountered in the last cycle. The problems in 2007 were patched up by bailouts and massive easing, and it took only two (very painful) years for the wounds inflicted by the early 2000s to appear to heal.

Today's challenges (fiscal imbalances, structural unemployment, etc.) suggest a more lengthy period of rehabilitation as the solutions to these problems cannot quickly be dispatched, as they are our inheritance from the last cycle and, maybe even, a decade or two of risk and debt accumulation before that.

So, remember for the future, if you don't pay attention to Mr. Market's history, it could be, "one, two, three strikes, you're out, at the old ball game!"

• Apple currently represents 17% of the Nasdaq.

Several subscribers have asked me what percentage of the Nasdaq does Apple (AAPL) represent.

Apple represented 21% of the Nasdaq before it was rebalanced months ago -- it then went down to 12%.

The appreciation in price since then has taken Apple to 17% of the Nasdaq.

• They include PepsiCo and IFF.

I have added to my PepsiCo (PEP) and International Flavors & Fragrances (IFF) longs today.

• Fusion's Joshua Brown has an interesting piece on 'How to Make Financial Content.'

Here's a fun read by Fusion's Josh 'Downtown" Brown on "How to Make Financial Content."

I am flattered!

• I am now covering this short at $528.

In response to a number of emails, with the sudden drop of nearly 17 points in Apple (AAPL), I am now covering my short at $528.

• The breakdown in basic materials/machinery names could be a specter of lower stock prices ahead.

Basic materials/macnhnery are breaking down (Freeport McMoRan Copper & Gold (FCX), Caterpillar (CAT), U.S. Steel (X), Joy Global (JOY), etc.), presenting a possible specter of lower stock prices ahead.

• Altisource make Louis Navellier's Quantum Stocks List.

Louis Navellier adds Altisource Portfolio Solutions (ASPS) to his Quantum Stocks List. (I am not sure how wide his following is.)

• Higher gas prices could threaten our tentative economic recovery.

"If the 1973 embargo experience repeats itself, the price of a barrel of oil could soar to $440 a barrel."

-- Tehran Times, "Oil Prices Could Soar to $440 a Barrel if Strait of Hormuz Closed"

If the Tehran Times is correct, a quantum rise in the price of crude oil could be the next black swan event.

For now, let's characterize the Tehran Times column as extremely hyperbolic and, perhaps, bordering on the delusional.

Regardless, there is much debate today as to the precise price level of crude that will dent economic growth.

With crude oil at around $107 a barrel on Friday, many say that the economic tipping point is $120 to $135 a barrel.

From my perch, the tipping point to economic growth could occur sooner than later and with oil prices that are not much higher than today's prices.

As we all recognize, despite the improvement in the jobs market, the consumer remains in a delicate state. Unemployment is elevated vis-à-vis past recoveries, and, despite zero-interest-rate policy, quantitative easing, fiscal stimulus (100% capital-spending tax credits which expired at year-end 2011) and the recent warm weather, economic momentum is lacking, as real GDP growth has barely averaged +1.5% in each of the last five quarters. (Goldman Sachs twice reduced its first-quarter 2012 GDP forecast on Thursday and is now estimating under 2% growth).

As we move toward the second half of 2012, the economic outlook is shrouded further under the uncertainty of the presidential election (and subsequent policy), the pall of a $500 billion fiscal drag into early 2013 from expiring tax cuts and a contraction in government spending.

Given these conditions, I would not be surprised to see the steady improvement in the jobs market to be reversed, which would be another headwind to the consumer's recovery.

Then there is the economic slowdown in Europe and possibly in China and India.

On Sunday afternoon, I conducted an informal survey in West Palm Beach, Fla. I went down Okeechobee Boulevard (the home of Okeechobee Steak House!), and there isn't a single gas station that is selling 87-octane unleaded gasoline for under $3.80 a gallon. (Where I reside, on the la-la island of Palm Beach, the price is approaching $5.00 a gallon.)

As/if we move toward $4.00-plus a gallon (nationwide), it is hard for me to believe that consumer spending won't be impacted. In fact, this might already have occurred, as both of ISI's retail surveys (broadline and specialty) showed a large drop in the week that just ended.

The price of gasoline is the most visible cost with which consumers deal. Most people drive by gas stations several times during the day. They watch news clips about higher gas prices on television and hear about it on the radio.

As I mentioned in my Barron's interview with Alan Abelson over the weekend, have you priced plane tickets recently? If you haven't, you will be surprised/shocked.

And look at the transportation index's recent swoon as a forward-looking tipoff of the possible demand impact of higher energy prices.

A tentative economic recovery is vulnerable to exogenous shocks, and higher gas prices might be one of the most conspicuous of those shocks.

Over the weekend, my buddy/pal/friend Cumberland Advisors' David Kotok sent me an email that provides an excellent history lesson and puts the oil price into perspective.

David has given me permission to summarize his email.

We thank BCA Research (March 1 special report) for compiling this list of oil/energy shock events. Every one of them led to a temporary spike in the oil price. I will add personal comments on the older items in the list, since many readers may be younger than I am. Note that in each case there was an oil-price spike, followed by some economic shock and then a period in which oil normalized to a supply/demand-balancing price.

November 1956 to March 1957 -- Suez Crisis. This marked the first time Egypt attacked Israel and was decisively rebuffed. Egyptian President Gamal Abdel Nasser triggered the event by nationalizing the Suez Canal, closing the canal and the Straits of Tiran to Israeli shipping, blockading the Gulf of Aqaba, and putting the Israelis in a "no other choice but war" condition. Britain and France reacted against Egypt. Israeli forces rebuffed the Egyptian army, crossed Sinai and reached the canal. Nasser had fought against Israel during its 1948 War of Independence. He had then led the overthrow of the previous Egyptian government in the early 1950s. He consolidated power in 1955 and 1956. Then he launched the attack.

Kotok comment: I remember the Suez crisis because it was a subject of intense discussion in my household. As a teenager in a community where many had family in the Middle East, it was impossible to avoid daily conversation and attention to the national news. Half a century later, I realize that the Middle East does not change much. Only the characters change. The story of strongman after strongman and war after war is an ongoing saga.

June-August 1967 -- Six-Day War. Israel was attacked on all sides and in a fight for survival. The result was a massive defeat for the attackers and the establishment of the Israeli armed forces as the dominant power in the region. Syrian, Egyptian and Jordanian forces were repelled. Jordan fought bravely but lost to the military superiority of Israel.

Kotok comment: Jordan's King Hussein changed his strategy after that war, which is why he did not participate in the next war against Israel. The Jordanian-Israeli nonbelligerency continues to this day. It gets strained at times, however, neither side wants war and both sides realize that war with each other is a losing proposition.

October 1973 to March 1974 -- Yom Kippur War and Arab Oil Embargo. On the possible advice of the U.S., Israel waited until it was attacked by Egypt and Syria. Jordan did not participate in the attack, and Israel did not attack Jordan. That allowed Israel to fight a two-front war instead of a three-front war. The attacking Egyptian and Syrian armies made a strategic blunder: They waited until the holiest day in the Jewish calendar to launch the war. Businesses were closed and families had gathered for the holiday, and that allowed rapid mobilization. Had the attack been on a midweek business day, the outcome could have been different. Israel again showed its determination when its back was to the wall and it had no choice but to fight.

Kotok comment: Iran may ignore history at its peril. Israeli leaders' patience is not a sign of weakness.

November 1978 to April 1979 -- Iranian Revolution. Jimmy Carter's presidency was undermined by the images of American hostages in Tehran. Oil and the Straits of Hormuz were the dominant themes.

Kotok comment: The late 1970s showed how monetary policy could be easy enough to allow an oil-price shock to morph into a broader and more vicious inflation. Oil gapped from $3 dollars a barrel to $12 a barrel in the Arab embargo period. It reached $30 a barrel at the peak in 1980. By 1979, inflation was headed to double digits. It took decisive action by new Fed Chairman Paul Volcker to attack it. Under Volcker (1980-1981), interest rates reached the highest levels in American history. Volcker broke the inflation cycle and started a 30-year disinflationary trend that has lasted until today. He positioned a platform for Fed Chairman Alan Greenspan to preside over 18 years of this trend. Ben Bernanke is the inheritor of that platform.

October 1980 to January 1981 -- Iran-Iraq War. Saddam Hussein showed his true colors. The enmity between Iran and Iraq continues to this day. Later in 1981, the Israeli air force destroyed the fledgling nuclear facility at Osirak, Iraq, weeks before it was to start operating. Years of Iraqi-focused diplomacy by the U.S. and the Western powers had failed. Israel again found itself with a no-choice decision.

The rest of this list is in the recent memory of most readers, so we will not add comments. Observations about oil and markets come after the list.

August 1990 to January 1991 -- Iraqi Invasion of Kuwait.

June-July 2001 -- Iraqi Oil Export Suspension.

December 2002 to March 2003 -- Venezuelan Strike.

March-December 2003 -- War in Iraq.

September 2005, Hurricanes Katrina and Rita.

BCA closed its list with this question about the future: "2012: Will there be 'closure of the Straits of Hormuz?'"

Take out the hurricanes and all the oil-price shocks have a common theme. There is a strongman. There is a shooting war or a threat of a shooting war. Diplomacy and sanctions and negotiation have failed. The final few days leading to the spike and the shock are impossible to forecast in advance. Probabilities of outcomes are meaningless. Tell me how anyone is to make a decision based on some geopolitical forecast of a 50-50 probability that Iran will mine the Straits of Hormuz. Or alternatively, a 50% chance Israel will attack Iran's nuclear facilities.

History also shows that oil prices have an upward trend during the period leading to the final spike. In every case, the peak in price only came after something was seen as a terminal event or final action. Subsequently, prices plummeted.

• Bank of America Merrill Lynch adds MetLife to its U.S. 1 List and removes Lincoln National.

MetLife (MET) is added to Brother Bank of America's/Mother Merrill's U.S. 1 List, and Lincoln National (LNC) is removed.