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9:00 AM EDT, Wednesday, October 7, 2009: It's time to sell some of your big winners -- especially those not backed by fundamental serious earnings improvements. This is a bubble, featuring a flight away from the dollar and bonds to equities and gold. This bubble will not last.

Yahoo! Finance's Tech Ticker yesterday featured an interview with a principal of IRA, entitled "The "Real" Economy Is Dying: Q4 "Going to Be a Bloodbath," Whalen Says," in which he expressed views that were in marked contrast to those of the gang that couldn't rate straight.

Stocks rallied to start the week thanks to a better-than-expected ISM services sector report and a Goldman Sachs upgrade of big banks, including Wells Fargo, Comerica and Capital One.

But all is not right in either the economy or the banking sector, according to Christopher Whalen, managing director at Institutional Risk Analytics. In fact, Whalen says most observers are drawing the wrong economic conclusions from the stock market's robust rally.

"Why is liquidity going into the financial sector? It's because the real economy is dying [and] everyone is fleeing into the stocks and bonds because they're liquid at the moment," Whalen says. "That's not a good sign."

The banking sector's assets shrunk by about $300 billion per quarter in the first half of 2009, a sign of banks hoarding cash in anticipation of additional future losses, according to Whalen. "The real economy is shrinking because of a lack of credit."

The shrinkage will continue into 2010, Whalen predicts, suggesting the banking sector hasn't yet seen the peak in loan losses. Institutional Risk Analytics forecasts the FDIC will ultimately need $300 billion to $400 billion to recoup losses to its bank insurance fund. (In other words, the $45 billion the FDIC sought to raise last week by asking banks to prepay fees is just a drop in the bucket.)

"Investors should think about this because the fourth quarter in the banking industry is going to be a bloodbath," says Whalen, who believes smaller and regional banks like Hudson City Bancorp may come into favor vs. larger peers, which have dramatically outperformed since the March lows.

"When you see the markets rallying when the real economy is shrinking that tells you this [recovery] is not going to be very enduring," Whalen says.

In this regard, Whalen finds himself in philosophical agreement with Nouriel Roubini, George Soros and Meredith Whitney, among other "prophets of the apocalypse" who've once again been raising red flags in recent days.

Yesterday's column was not Monday's. I labeled it Monday, but it really was Tuesday's. It had some lessons I learned from my horrible investments in private equity funds and a big article on how a private equity firm called Thomas H. Lee Partners drove one of its investments -- Simmons Bedding Company into bankruptcy -- yet profited enormously itself. The article, from the New York Times, is eye-opening. Here's the link to yesterday's column -- click here.

I got a virus. I was dumb. I was fiddling around installing software on a new, clean disk. (It's better to install software without virus checking software running in the background). But I connected -- without thinking -- to the Internet. And bingo, I got a virus. I then loaded Symantec/Norton. It found the virus. But it couldn't rid my machine of the offending file. I don't know why. So I simply swapped the offending hard disk for a previously-cloned disk.

Lesson: Always keep clone your hard disk, and keep the clone handy.

Afghanistan drags on, and on and on. There are few people skilled in closing things down. There are many, many people whose careers are tied to the continuation of a disaster -- especially if someone else is paying for that disaster. I spent two hours last night attending a debate on Afghanistan. Topic: "America cannot and will not succeed in Afghanistan." You'll hear it re-broadcast on NPR and Bloomberg.

Upshot: No one has defined "success." America went to Afghanistan in 2001 to crush Al Qaeda for 9/11. Eight years later, Al Qaeda is now stronger or weaker than it was then -- depending on which side you believe. No one knows what we're there now.

Points:

+ The Afghan army is key. But we can't get them to show up. If the afghans are fighting, why are we sending 40,000 more troops?

+ We are spending more in Afghanistan each year ($65 billion) than the entire GDP of that country. It would be cheaper to buy the country, quipped one debater.

+ Americans are dying for the Karzai administration, which is corrupt and unpopular, and just stole the latest election.

+ You cannot nation build where there is no nation to build.

+ The U.S. is living in a dream world. (Huge applause for that statement.)

+ The Taliban do a better job than we do in delivering security, property rights, and economic stability.

+ American has vital security interests in both Afghanistan and Pakistan. We need to be there to make sure the insurgents/terrorists don't get their hands on Pakistan's nukes.

+ We'll have to be there forever.

Sadly, no one could answer the one question that resonated in my brain: Tell me how this ends?

How stupid is your child?
Alleged comments made on student report cards by New York City teachers:

+ Since my last report, your child has reached rock bottom and has started to dig.

+ I would not allow this student to breed.

+ Your child has delusions of adequacy.

+ Your son is depriving a village somewhere of an idiot..

+ Your son sets low personal standards and then consistently fails to achieve them.

+ The student has a 'full six-pack' but lacks the plastic thingie to hold it all together.

+ This child has been working with glue too much.

+ When your daughter's IQ reaches 50, she should sell.

+ The gates are down, the lights are flashing, but the train isn't coming.

+ If this student were any more stupid, he'd have to be watered twice a week.

+ It's impossible to believe the sperm that created this child beat out 1,000,000 others.

+ The wheel is turning but the hamster is definitely dead.

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, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Michael's business school tuition. Read more about Google AdSense, click here and here.