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8:30 AM EST Thursday, June 26, 2008: Each day, Todd, my always-ebullient broker, tells me we will shortly have a one-day 300-400 point jump in the Dow. His clients are despairing and bailing out of the market. When pain is at peak and blood flows in the street, he says we've reached bottom. There are four aspects to this theory:

First, he has to think this way. Otherwise he couldn't survive from one day to the next. No one in his miserable job could.

Second, all bear markets (like the one we're in) don't go straight down. Some days, God willing, are up.

Third, there are stocks that go up in bear markets. A few and they're not easy to find.

Fourth, selling short is most profitable in a bear market, but also most dangerous. You have to be attentive. You have to bail fast when the tide turns against you.

To Todd's credit, he calls his prediction a "Bear Market Rally."

The last bear market was 2000 to 2002. Here's a chart from the Economist I keep on my hard drive as my "Call To Reality."

That last bear market happened when tech stocks imploded. This time the causes are much more widespread: Housing is imploding, oil is exploding and we have a serious Credit Crunch.

Here's a long-term chart which includes the late 1990s run-up, the 2000-2002 crash, the 2003-2007 recovery and now the late 2007-2008 beginnings of a bear market.

Many learned observers are referring to The Beginning of New Era, where the major influences will be tighter (and less) bank lending, lower leverage on deals, much higher inflation and some innovation in alternative energy.

A dear Australian friend, Rob Douglass, sent a copy of The Pain Report, written by HFA Asset Management's talented Jonathan Pain. It has two neat charts. This first chart shows the tight relationship between crude oil prices and Chinese oil imports:

This second one shows what's happening with the price of homes here. Not pretty.

You can read the entire Pain Report.

This morning Goldman Sachs downgraded U.S. brokers (which I'm guessing includes Lehman Brothers, my favorite short). Goldman put Citigroup (C) on its "Conviction Sell List." Not good for Citigroup. Think of all the poor schmucks that tried to catch Citigroup's falling knife.

Goldman also downgraded General Motors. Yesterday they downgraded Boeing. This does not look pretty: Think of the billions and billions of dollars of net worth that are daily being wiped off.

Warren Buffett speaks with Bloomberg. Buffett says he is concerned about “stagflation”, or slowing in the US economy while inflation accelerates. “We’re right in the middle of it right now,” said Buffett, chairman of Omaha, Nebraska-based Berkshire Hathaway. “I think the ‘flation’ part will heat up and I think the ‘stag’ part will get worse.”

He said the US housing slump has been a drag on Berkshire’s earnings, adding that he was unsure when the economy would recover. “It’s not going to be tomorrow, it’s not going to be next month, and may not even be next year,” said Buffett.

Click on the image below to watch the Bloomberg video. There's a short ad at the beginning.

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Take cash when gasing up. Spied by reader, John Eckstein, on a recent road trip in California. Note the higher price for credit card gas. Careful which nozzle you use also. Reported Eckstein, "I pulled up to the pump, inserted my card and noticed that the high test was located at the far right side of the pump. One would assume that regular would be at the other end. So I pushed the button on the left and went in to buy a drink.
When I came out, I saw that I was being charged $4.71 per gallon. They charge more for cash (read the fine print), and they locate the Regular gas button in the center. Check."

George Carlin on HBO. Carlin recorded 14 live comedy stand up specials for HBO.

HBO will air Carlin's most recent live comedy special, "It's Bad for Ya," at 9 p.m. Friday, June 27. Yesterday it aired five shows. Tonight it will air six more episodes:

For those of you without HBO, there's always the complete set: All My Stuff

Wimbledon continues today. Marat Safin, the 65th ranked player in the world, took out Novak Djokovic, the third ranked. Safin can win Wimbedon if he plays as well as did against Djokovic. But that's a big IF. Safin's head is frequently in the wrong place. You can watch 14 hours of tennis today. That will be much more enjoyable than watching the ticker today. Here is the TV schedule. All times listed are Eastern Standard Time (L) = Live (T) = Taped

Oy Veh
Jacob meets his friend Max in the Hendon delicatessen. "So Max, how’s your wife Kitty?"

Oy veh," replies Max, "she’s driving me absolutely crazy. Every night she dreams that she’s married to a millionaire."

"That’s nothing," says Jacob, "my Sadie dreams she’s married to a millionaire during the day."

How to figure your age
Sadie was divorcing her husband Moshe. The judge asked Sadie, "So how old are you?"

"I’m 40 years old, your Honour."

The judge replied, "Please answer my question honestly. How old are you?"

"I’m 40 years old, your Honour," answered Sadie again.

"Well," said the judge, "you’re not being truthful. It’s written down here that you were born in August 1940 and that means you’re over 60."

"But your Honour," replied Sadie, "I’m not counting the last 20 years with my husband."

"Why not?" asked the judge.

"You call that living?" replied Sadie.

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.
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