Yes, there will be blood.
The Fed's January 22 unprecedented emergency rate cut was ill-conceived and poorly timed. Today's rate cut highlighted the fear and short-term thinking that has gripped the country. Rather than waiting until the scheduled FOMC meeting next week, the Fed cut interest rates to a degree not seen in 24 years! Just to stem a decline in share prices? The Fed does not intervene during bull market cycles to deflate prices, yet in intervenes to insert an artificial floor today.

For Every Action, there is an Equal and Opposite Reaction

Following today's cut, the February Fed Funds futures were showing a 90% chance that the Federal Reserve will lower its target rates to another 50 basis points to 3% at the next FOMC meeting on January 30. This impending rate cut will surely be inflationary and contribute to a further decline in our prized currency. The U.S. dollar is no longer the safe haven the the world it once was and these recent developments are further distancing the dollar from a return to parity with other global currencies. This bodes well for gold prices. A current gold ETF holding of mine is GLD, which has held up well in this downturn given its lack of correlation with share prices.

What will these accelerated rate cuts really accomplish?

The intent of a cut in interest rates is to spur borrowing via lower rates, so companies and individuals are more apt to take on debt via leverage at low interest rates. A U.S. recession is imminent. With a populous incurring a negative savings rate over the course of years, consumer debt at record levels and companies hoarding cash with nowhere else to invest it, what group is this cut meant to stimulate?

Everyday Finance Portfolio Moves

Perhaps I'm a bit too pessimistic here. I think there are still values out there and markets always over-react. We know this. Therefore, rapid moves down like this make for opportune bargain purchases. In order to go bargain hunting, one must have cash. That's where my hedging positions came in handy today. In the past several days, as I observed this train wreck unfolding, I entered into 2X inverse positions in the Financials (SKF) and China (FXP) and sold today for rapid, handsome profits. I've also been holding Feb 47 strike QQQQ puts. I unloaded all these positions today, save for a sole remaining put option. This freed up adequate cash to go back into the market this week to pick up some shares on sale.

Perhaps Apple (AAPL), down 11% in after hours following a not-so-rosy forecast? Did you ever think you'd get in to Apple in the 130s again?
Perhaps Baidu.com (BIDU), down significantly off its peak, below 300?
Focus Media (FMCN) is also looking especially attractive at 46 given its monopoly pricing power on flat screen advertising coming into the 2008 Olympics.

Of the existing plays listed here, what are your thoughts on the best fire sale at current prices?

Disclosure: I currently have a position in GLD, BIDU and FMCN.