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9:00 AM EST, Monday, December 8, 2008: The good news is there's still oodles of cash money looking for a place to invest. The bad news is that everyone who has recently "put their money to work" has lived to regret it -- as they watched their "bargains" plummet .

As we read the financial press and watch BubbleVision (CNBC) we need to keep reminding ourselves: These are full-time, "professional" money managers who must invest their monies. No one is going to pay them the big bucks to keep your and my money in cash. They are forced to invest. We are not. Cash is where I want my money now. And where I want yours too.

But, Harry, the stockmarket is a forecasting animal. It comes back long before the economy. Hence now is the time to invest. That's the argument I hear increasingly. I don't buy it. I figure we're facing another three years of an awful economy. "But Harry, last week it went up strongly." Yes, I reply. And there are always big rallies in bear markets. Look at the chart. You'll see a number of bounces, though the market has continued to slide.

The "big" news is the huge volatility. People who've got the stomach for it can potentially make oodles of money trading this market. But it's not my skill. You got to hawk eyes and an iron stomach. Frankly, I'd rather sit on the sidelines waiting for something more normal. I'm happy to miss the bottom. It's too hard to pick.

The Wall Street Journal had a piece on Friday on a very successful fund manager, Kenneth Heebner, who did well shorting the financials earlier this year. Then ...

This fall, Mr. Heebner built a more than $1 billion combined position in Citigroup Inc. and Bank of America Corp. He has put $780 million in two Brazilian banks, Banco Bradesco SA and Banco Itau Holding Financiera SA, counting on U.S. actions to help lending abroad. CGM Focus's biggest holding through September was $552 million in Wells Fargo & Co.

About 40% of his $4.3 billion CGM Focus was in financial stocks as of Sept. 30, according to its portfolio report.

In determining which ones to buy, Mr. Heebner is leery of certain traditional earnings multiples that don't always best gauge affordability. So for banks he uses two other measures, which suggest they are at historically cheap levels and, because he feels strong rebounds are assured, are ripe for plucking.

One such metric is "price-to-tangible book value." For 20 big lenders, including Citigroup, Bank of America and Wells Fargo, this runs about 1.1 times, compared with 2.7 on average since 1990, according to a Goldman Sachs report. Tangible book value is the net worth of a company after stripping out intangible assets such as goodwill and patents. A lower ratio suggests a bank's stock is undervalued but can also suggest assets are overstated.

Citigroup has gotten much cheaper in the past six months. In June, the bank's market price was twice that of its tangible book value. As of Friday, its market value had sunk to less than its hard assets, a 0.96 ratio, Citigroup's lowest since 1990.

His second measure is the "price-to-preprovision earnings" ratio. For these 20 banks, it is 5.4 times compared with 12.2 times on average. Preprovision earnings exclude provision expenses for loan losses and measure banks' earnings power. A relatively low ratio can mean the market is underestimating the value of a bank's potential for profits. But a low ratio also can be warranted if the market believes a company hasn't provisioned enough for such losses.

Financial stocks have been relatively cheap for some time, and many fund managers got into them early, and paid for it dearly. Managers such as Oakmark Funds' Bill Nygren still held Washington Mutual Inc. earlier this summer. Regulators seized the firm in September and sold its banking operations to J.P. Morgan Chase & Co. His nearly $2 billion Oakmark Select Fund is down 43% this year, following a 14% slide in 2007.

Mr. Heebner's previous bearishness about financials was unequivocal. By last June, he had dumped shares of Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co. because he was concerned their hedge-fund, private-equity and proprietary-trading businesses were using too much leverage.

He has shorted Countrywide Financial Corp., IndyMac Bancorp Inc., Wachovia and Washington Mutual because of their exposure to troubled mortgages. All four companies either have collapsed or been acquired since last year.

So it is all the more remarkable that Mr. Heebner, 68 years old, is changing his strategy. In September, when the government started taking steps to inject capital into banks and back troubled assets, he became convinced that confidence in credit markets would be restored and financial stocks would benefit.

He was further encouraged by consolidation within the sector, which he believes will bolster big banks over time. This includes Wells Fargo deciding to buy Wachovia and Bank of America acquiring Merrill Lynch this year.

For such companies, "in the next year, lending and deposit accumulation will be more profitable than ever before," he said.

Mr. Heebner knows his positions in financials could suffer more pain, as the recession brings more mortgage foreclosures and asset write-offs. He admits that the eruptions of bad news are sometimes disconcerting. Citigroup's announcement last month that the government will absorb as much as $249 billion in potential losses on real-estate loans and securities held by the bank "came out of the blue" and "I was scratching my head," said Mr. Heebner.

He is offsetting those bets with defensive picks. That includes Wal-Mart Stores Inc. and McDonald's Corp., bargain-oriented retailers that would both benefit as consumers rein in spending. Gold stocks such as Goldcorp Inc. and Barrick Gold Corp. represent another haven.

Mr. Heebner, who likes to trade frequently, likely has shuffled some of his financial stocks since September, but insists financials remain a top bet. For investors, one problem with Mr. Heebner is rapid portfolio turnover, which can generate capital-gains-tax liabilities.

Mr. Heebner trades his 25 to 30 stocks more frequently than other funds to reflect his latest ideas. While the average U.S. stock mutual fund turns over assets less than once a year, CGM Focus does so almost four times annually, according to fund tracker Morningstar Inc.

Mr. Heebner has been investing money for more than 30 years. ...

Where are you putting your money?
Dear Reader, I know you're brighter and have better ideas than I do. Where are you investing now? Are you buyng equities and/or bonds? Are you in cash? What's your thinking? What's your outlook? Send me an email, please. .

Year end tax strategies.
Harvest your losses is the old end-of-year battlecry. No sense in paying taxes on stocks or mutual funds that might have profits.

How to buy a telephoto lens for your new SLR.
First, your lens must be image stabilized -- have electronics so you get a sharper picture.

Second, are you going to use it mainly outside in good light? Or will you use it in difficult light. Zoom telephotos typically admit less light. They force you to use a slower shutter speed, which means more diffculty getting sharp focus, or the need to carry a tripod. Single focus telephotos typically admit more light, but to get closer you have to move yourself.

I once tried to photograph an evening wedding with zoom telephoto. It was a disaster. The camera wouldn't focus. I couldn't see enough through the lens to manually focus it. My favorite lens for my old, but trusty, Nikon D100 is the 85mm fixed lens. It's perfect for portraits. It opens to f1.8. It's not image stabilized. But I can hold it. I also have an 18-200 MM zoom which is image stabilized. But it typically shoots at f5.6, though it will open to f3.5 on an 18 mm wideangle setting, which I rarely use. Today, my preference is for fixed focus lenses.

Obsessed with many screens -- update. Many screens make light work. I routinely run four screens from my laptop -- the laptop's and three external screens. This morning I'm running five screens. That's five screens from one laptop -- my Lenovo ThinkPad X61 ( now about to be replaced with the newer Thinkpad X200).

Harry's desk, showing stockmarket quotes, the Wall Street Journal, Outlook, email and Dreamweaver.

I won't keep running five screens. (Four is sufficient.) But it does demonstrates the wonders of a great new product -- the $129 ViBook.

The ViBook is half the size of a cigarette pack.

The ViBook plugs into your USB 2.0 port or USB 2.0 hub. Every time you plug one in, you power up another monitor. You can plug in as many as six. The thing plugs into your monitor's DVI port or its VGA/RGB port. Choose the DVI port. It's much clearer. The thing works with Windows and Macs -- but you must have a Mac with an Intel processor (the latest ones do).

You can plug it directly into your monitor and have only a thin cable going to your computer's USB slot or USB hub. Makes for a really neat installation.

Having many screens is great -- one for Outlook's inbox, one for stock quotes, one for the Internet, one for an Excel spreadsheet, one for answering emails and one for buying goodies at Amazon to reward yourself for being so productive. You can easily move things from one monitor to another, or spread an Excel spreadsheet across five monitors and wallow in complete fantasy.

The ViBook will power up to a 1680 x 1050 pixel screen -- which typically is a 22 inch monitor. I have one in the middle. My others are 19" inch monitors -- 1280 x 1024 pixels.

You buy the thing from the maker Village Tonic. I love my ViBooks. They work flawlessly. And I get lots of exercise moving my head around, chasing screens.

The old sailor.
An old retired sailor, puts on his old uniform and heads for the docks once more, for old times sake. He engages a prostitute and takes her up to a room. He's soon going at it as well as he can for a guy his age, but needing some reassurance, he asks, 'How am I doing?? '

The prostitute replies, 'Well, old sailor, you're doing about three knots '

'Three knots?' he asks. 'What's that supposed to mean??'

She says, 'You're knot hard, you're knot in, and you're knot getting your money back.

The wife.
A woman's husband had been slipping in and out of a coma for several months, yet she stayed by his bedside every single day. When he came to, he motioned for her to come nearer. As she sat by him, he said, "You know what? You have been with me all through the bad times. When I got fired, you were there to support me. When my business failed, you were there. When I got shot, you were by my side. When we lost the house, you gave me support. When my health started failing, you were still by my side... And now you're by my side as the market is falling. You know what?"

"What dear?" She asked gently.

"You're a jinx."

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.