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9:00 AM EDT, Monday, November 2, 2009: Where now? October went nicely up and then not nicely down.

The Dow and the S&P have now broken below their 50-day moving average. To many this is big-time important, though it also broke below the 50-day in July and then bounced up. So much for charting:

What to make of it? Personally, I am now officially bearish. Here are my reasons.

1. We're already up a long way from the March lows. One should expect a pullback.

2. Some corporate profits have bounded back, but many haven't.

3. The investing public is really annoyed at "Wall Street." That translates into a heavy skepticism towards the market. Time Magazine's cover was on hateful Wall Street.

4. Economic statistics still suck -- from unemployment to huge government deficits, from the plummeting dollar to the huge problems in the banking industry.

Investors are also cautious. A story in last week's Bloomberg:

Oct. 29 (Bloomberg) -- An eight-month, 68 percent rally in global stocks failed to convince investors and analysts that it’s time to take on more risk or dispel their concerns about U.S. economic policies and its banking system.

Only 31 percent of respondents to a poll of investors and analysts who are Bloomberg subscribers in the U.S., Europe and Asia see investment opportunities, down from 35 percent in the previous survey in July. Almost 40 percent in the latest quarterly survey, the Bloomberg Global Poll, say they are still hunkering down. U.S. investors are even more cautious, with more than 50 percent saying they are in a defensive crouch.

“The doubt and the pessimism just won’t go away,” says James Paulsen, who helps oversee $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “They’re still so shell-shocked by what they went through despite the improvement in the market and the economy.”

I believe this is the time for all of us:

1. To be ultra-cautious, i.e. be heavily in cash.

2. To take some fliers on the EFTs which short the S&P -- SH, SDS, and SPXU. I wrote about them on Thursday.

3. To be in gold. GLD is above its 50-day moving average.

The huge coming crash in commercial real estate. From a Bloomberg story on Friday:

Oct. 30 (Bloomberg) -- Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.”

“All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up.”

U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc. The Moody’s/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19.

Billionaire George Soros, speaking today at a lecture organized by the Central European University in Budapest, said a “bloodletting” may be coming for leveraged buyouts and commercial real estate.

Every bank in the country has lent on commercial real estate. They're holding that real estate on their books at vastly inflated values. Bankers fear for their jobs -- and their bank -- if they are forced to write the value of their loans down. Hence many bankers have clammed up and are simply not lending. This is depressing the economy.

I own real estate. Some of it is performing -- the rents are paying the expenses and the mortgage. Some are not. Overall, it's a depressing picture. In "normal" recovery out of a recession, we would not have this huge overhang. It's a big reason to be depressed.

The full Bloomberg story is here.

What to do with cash? Not much is the simple answer. By keeping interest rates ultra-low, the Feds are encouraging you and I to borrow. At least that's the theory. The reality is that it's free money for the banks to speculate with the money. Banking is about spreads -- what you borrow at, what you lend / "invest" at. The banks can make easy money off Uncle Sam and its strange economic policies. For me, cash is an FDIC-insured money account paying 50 basis points. You can get a little more with a bank CD.

it's a strange world where savers are discouraged from saving and banks are encouraged to speculate.

Brazil continues to perform:

It got a nice mention in Fortune this weekend.

"Brazil's Big Bounce. The bustling economy survived the global slump in style, and many of it stocks are still reasonably valued."

Weekend news.
Susan and I traveled to Los Angeles for Anne's big Halloween birthday party. During the party, Michael took Anne outside and proposed. Remarkably, she accepted. He produced a ring -- hidden in the trash can, of all places and placed it on her finger. It fit perfectly, a testimony to planning and guesswork. It was impossible to talk to either of them for the rest of the weekend. They were flying so high, way above all of us.

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads on this site. Thus I cannot endorse any, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. Read more about Google AdSense, click here and here.