In case you were wondering why there are no financial stocks in my Trader's Advantage portfolio, you should check out the following article I wrote for MSN back in January, "How the Smart Money got it Wrong."

Smart money? Not so much. A review of the one-year results of value-focused funds with some of the best long-term records shows that a virus of total stupidity savaged their ranks as one after another bought into banks, credit card providers, home builders and retailers at bargain-basement prices that seemed too good to be true -- and were.

In the grand scheme of things, little has changed for financials since I first wrote this in January. The "smart money" has been killed on the financials this year ... and with Fannie Mae (FNM) and Freddie Mac (FRE) down another 40% today, and Lehman (LEH) down 20%, this is as true today as ever.

Along the same vein, back in December I quoted Jim Rogers as saying that FNM and FRE were technically bankrupt back then and would probably be "nationalized." At the time that I wrote the MSN article, "Stock Market Winter is Moving In," this statement seemed pretty outrageous to most.

With FRE currently trading at under $4, it's far from outrageous now.

What it all comes down to is that if you're thinking about investing in financials, do so with flame-retardant gloves and full hazmat suit.