The Third Quarter is getting off to a rousing start. Economic data for the day is generally good - manufacturing shrunk less than expected and pending home sales rose more than expected. As of this writing (12:40 P.M. Eastern) the Dow is up 1.25%. Traders seem willing to forgive the larger than expected drop in private sector payrolls.  We’ll see how long that forgiving attitude lasts…

With so much bad news about real estate, it’s hard to believe that a real estate fund could have good returns. Yet the First American Real Estate Securities Fund has held up quite well because its holdings are almost entirely commercial properties. It’s the residential sector that has been saddled with overbuilding, subprime debt and foreclosures.

Last month, many investors were again caught unaware when Bear Stearns, the fifth-largest U.S. investment bank, and one of the street's blue bloods, announced that it was being rescued by JP Morgan Chase and the Federal Reserve Bank of New York.

Although the economy is obsessed with mortgage problems, only a few mortgages actually have problems.