Some men just want to watch the world burn.

We are certainly not out of the woods yet, but Watchmen is the first meaningful movie of 2009 to top the box office.  Until now, the #1 movies have been formula recycles, sequels and predictable genres meant to amuse but not enlighten. 

In fact, you have to go back to The Dark Knight last summer for a #1 movie that challenged the typical "boy+girl+situation" stories Hollywood puts out week after week.  The Dark Knight set the stage for the crash, with the Joker playing the agent of chaos, the Batman as the vigilante turned outcast and Harvey Dent as the officer of trust corrupted by evil. 

When the Joker burns a huge pile of cash and claims, "It's not about the money, it's about sending a message!" we all get the message clearly as the market tanks, the trillions burn and no one has any answers  or plans for a recovery.  You could take any of the major players last year and put the Joker's words in their mouths when he says, "Do I look like a guy with a plan?"

In the end, Batman is cast out, becoming the anti-hero Gotham deserves and we experience the market we deserve.  We let greed corrupt our companies, our regulators and our finances and paid the price. 

Investor confidence was shaken just like the Batman, trying to figure out what motivated the Joker.  Albert, the butler, summed it all up by saying, "Some men just want to watch the world burn."

Our current market is just like that mountain of cash on fire and we all watch it burn, helpless to put out the flames.

The big question now is when will the market bottom?  History tells us the market will turn six months before the recession ends and it will be quick and huge.  Big gains are made on these turns so conventional advice says to stay invested so you don't get left behind.  This strategy has cost investors big.

MarketBOB is not a technical or value indicator.  It tracks investor confidence in the predictability of the future.  Finding the bottom will be an emotional search for confidence, not a technical pattern in a chart or a magical P/E ratio so compelling that the herd turns and runs for their wallets.

When will confidence return?  We need more movies like Watchmen reaching #1, with market follow-through and a growing optimism in the herd.  This week could be the start of the turn.  We have to wait and see.

Do we trust the smartest man to keep the world safe?

Watchmen is a "what if" movie; what if Nixon had a 3rd term in office and what if America won the war in Vietnam?  Change an event here or there and we have an alternate reality to consider.  Would it be better than our current situation?  What if superheroes were on America's side, helping us win wars or prevent wars, discover new technology or change the balance of power?

Investors play "what if" all the time.  What if you sold out before Lehman Brothers?  What if you had listened to that hot tip about Apple or Google?  What if oil goes back over $100/barrel? 

The point is, we have choices and we make decisions all the time.  But what if, as in Watchmen, we let the smartest person in the world decide for us.  Whatever the results, if that person is so smart, it must be good for us.  What if millions die?  What if individuals closest to us die?  What if we don't even know this smart person is making these decisions?  Would we let the smartest man decide for us all?

During the Enlightenment, society let benevolent despots do exactly that, decide for us all.  Even now, investors abdicate decisions to smart people (experts) who tell us when and what to buy.  We may not know the reasons or the logic behind the expert's thinking, but we trust them.  We believe they have the answers.  Trust is the basis of confidence.  Trust is also at an all-time low, with the Madoff-type frauds, the gaps in regulations and oversight and the general market system which seems to be an insider's game.

The audience cheered for Rorschach after he was attacked in the prison cafeteria.  He beats the hell out of his assailant and then stares down the prison population with these words: "I'm not locked in here with you, You're locked in here with me!"  Rorschach is the movie's symbol of truth and integrity and, even locked away, he is in the power position.

At the end of Watchmen, after all the battles and millions of deaths, even after Rorschach the narrator is splattered into a red ink blot in the snow by Dr. Manhattan, the truth lives on.  The story will be told through the crank files of the newspapers, where Rorschach's journal tells all.  The story comes full circle again, back to the death of the Comedian (the Joker in this story) and the yellow smiley face.

So, when will confidence return? 

• When we know the truth behind the sub-prime crash. 

• When we know where all the billions in bailout and stimulus went.

• When there is an accounting of responsibility, for all those executives risking corporate assets for personal bonuses. 

As the Comedian remarks, "I thought I knew how the world worked - I did bad things, but it was war."

The movie is book-ended by two Dylan songs, The Times They are A'Changin' and Desolation Row.  We are somewhere in between these two tunes, like the characters in Watchmen.  If I can paraphrase Dylan, "the loser now, will be later to win, for the Markets, they are a'changin"

We just don't know exactly when.  But it is starting with Watchmen.