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8:00 AM EST, Wednesday, October 1, 2008: Yesterday was the end of the quarter. So the market went up. The Dow rose 485, recouping much of the previous day's 777 decline. September was more difficult than even awful July. Losses will be super high in managed accounts. Don't even think of opening your hedge fund's upcoming email.

September's trend was down. It was a bear market. Like all bear markets, there were days of sharp ups and days of sharp downs. But the trend was down. And I believe it continues down.

You'll quickly learn two things: No one knows why it goes down one day and up the next. The financial writers ascribe movement to a single event . We passed the bailout bill -- UP. We didn't pass it -- DOWN. That works for headlines. But it's overly simplistic, and mostly not true.

There is no way to play this market successfully. That's why all your hedge fund reports for September will look so awful.

My recommendations remain:

1. Cash is king. Watch out for where you put it. Banks are still collapsing.

2. Stay 100% out. Don't even try shorting "obvious" shorts -- like Toll Brothers (see below).

3. Muni bonds continue to look interesting for investors in high-tax states.

Actual conversation yesterday.
Harry: Why did it go up today?

Hedge fund manager: Because it went down yesterday.

Harry: So, tomorrow (that's today) will go down?

Hedge fund manager. Maybe. Except no system works for more than a day. So it will probably go up. We got to start thinking like the market.

Harry: You buy what Keynes said, "The stockmarket can stay irrational longer than you can stay solvent."

Hedge fund manager. You have to be careful.

Harry: You buying anything?

Hedge fund manager. We bought a little J.P.Morgan and Bank of America. If the market settles down, we'll invest more.

Harry: You used to love dividend paying stocks?

Hedge fund manager. Yes, there are stocks with dividend yields of 15%, 25%, 30%. There's even one called Golden Ocean Group (GDOCF) yielding 59% to 65% (depending on how you figure). It's a dry bulk shipper. It yields a lot because the market thinks it's going out of business. Its stock has cratered.

Spot rates for bulk cargo have cratered. There's another one called Star Bulk Carriers (SBLK) which is yielding only 20%. In this case the dividend looks more solid, since the company has forward sold its capacity for the next several years.

Harry: How do you sleep at night?

Hedge fund manager: I don't. I'm up five times a night.

Toll Brothers continues heavy insider selling. One of the great puzzles is why Toll Brothers, the leading builder of big homes, has held up so well, especially given heavy and continued insider selling. Some see value in the land and cash ($1.5 billion) it has. I'm not so sure. However, there is a neat cover story on them in the latest Portfolio magazine:

You won't find the story on their web site. Condé Nast wants you to subscribe. You should. It's cheap. For $12 you get 12 issues of magazine and a free golf umbrella, which I'm guessing you can use even if you don't play golf. Subscribe here.

Here's Toll's stock price charted weekly.

Looking for a new business? From today's New York Times, by Jeffrey Gettleman:

Somali Pirates Tell All: They’re in It for the Money

NAIROBI, Kenya — The Somali pirates who hijacked a Ukrainian freighter loaded with tanks, artillery, grenade launchers and ammunition said in an interview on Tuesday that they had no idea the ship was carrying arms when they seized it on the high seas.

“We just saw a big ship,” the pirates’ spokesman, Sugule Ali, said in a telephone interview. “So we stopped it.”

The pirates quickly learned, though, that their booty was an estimated $30 million worth of heavy weaponry, heading for Kenya or Sudan, depending on whom you ask.

In a 45-minute interview, Mr. Sugule spoke on everything from what the pirates wanted (“just money”) to why they were doing this (“to stop illegal fishing and dumping in our waters”) to what they had to eat on board (rice, meat, bread, spaghetti, “you know, normal human-being food”).

He said that so far, in the eyes of the world, the pirates had been misunderstood. “We don’t consider ourselves sea bandits,” he said. “We consider sea bandits those who illegally fish in our seas and dump waste in our seas and carry weapons in our seas. We are simply patrolling our seas. Think of us like a coast guard.”

The pirates who answered the phone call on Tuesday morning said they were speaking by satellite phone from the bridge of the Faina, the Ukrainian cargo ship that was hijacked about 200 miles off the coast of Somalia on Thursday. Several pirates talked but said that only Mr. Sugule was authorized to be quoted. Mr. Sugule acknowledged that they were now surrounded by American warships, but he did not sound afraid. “You only die once,” Mr. Sugule said.

He said that all was peaceful on the ship, despite unconfirmed reports from maritime organizations in Kenya that three pirates were killed in a shootout among themselves on Sunday or Monday night.

He insisted that the pirates were not interested in the weapons and had no plans to sell them to Islamist insurgents battling Somalia’s weak transitional government. “Somalia has suffered from many years of destruction because of all these weapons,” he said. “We don’t want that suffering and chaos to continue. We are not going to offload the weapons. We just want the money.”

He said the pirates were asking for $20 million in cash; “we don’t use any other system than cash.” But he added that they were willing to bargain. “That’s deal-making,” he explained.

Piracy in Somalia is a highly organized, lucrative, ransom-driven business. Just this year, pirates hijacked more than 25 ships, and in many cases, they were paid million-dollar ransoms to release them. The juicy payoffs have attracted gunmen from across Somalia, and the pirates are thought to number in the thousands.

The piracy industry started about 10 to 15 years ago, Somali officials said, as a response to illegal fishing. Somalia’s central government imploded in 1991, casting the country into chaos. With no patrols along the shoreline, Somalia’s tuna-rich waters were soon plundered by commercial fishing fleets from around the world. Somali fishermen armed themselves and turned into vigilantes by confronting illegal fishing boats and demanding that they pay a tax.

“From there, they got greedy,” said Mohamed Osman Aden, a Somali diplomat in Kenya. “They starting attacking everyone.”

By the early 2000s, many of the fishermen had traded in their nets for machine guns and were hijacking any vessel they could catch: sailboat, oil tanker, United Nations-chartered food ship.

“It’s true that the pirates started to defend the fishing business,” Mr. Mohamed said. “And illegal fishing is a real problem for us. But this does not justify these boys to now act like guardians. They are criminals. The world must help us crack down on them.”

The United States and several European countries, in particular France, have been talking about ways to patrol the waters together. The United Nations is even considering something like a maritime peacekeeping force. Because of all the hijackings, the waters off Somalia’s coast are considered the most dangerous shipping lanes in the world.

On Tuesday, several American warships — around five, according to one Western diplomat — had the hijacked freighter cornered along the craggy Somali coastline. The American ships allowed the pirates to bring food and water on board, but not to take weapons off. A Russian frigate is also on its way to the area.

Lt. Nathan Christensen, a Navy spokesman, said on Tuesday that he had heard the unconfirmed reports about the pirate-on-pirate shootout, but that the Navy had no more information. “To be honest, we’re not seeing a whole lot of activity” on the ship, he said.

In Washington, Geoff Morrell, the Pentagon press secretary, declined to discuss any possible American military operations to capture the ship.

“Our concern is right now making sure that there’s a peaceful resolution to this, that this cargo does not end up in the hands of anyone who would use it in a way that would be destabilizing to the region,” Mr. Morrell told reporters at the Pentagon. He said the United States government was not involved in any negotiations with the pirates. He also said he had no information about reports that the pirates had exchanged gunfire among themselves.

Kenyan officials continued to maintain that the weapons aboard were part of a legitimate arms deal for the Kenyan military, even though several Western diplomats, Somali officials and the pirates themselves said the arms were part of a secret deal to funnel weapons to southern Sudan.

Somali officials are urging the Western navies to storm the ship and arrest the pirates because they say that paying ransoms only fuels the problem. Western diplomats, however, have said that such a commando operation would be very difficult because the ship is full of explosives and the pirates could use the 20 crew members as human shields.

Mr. Sugule said his men were treating the crew members well. (The pirates would not let the crew members speak on the phone, saying it was against their rules.) “Killing is not in our plans,” he said. “We only want money so we can protect ourselves from hunger.”

When asked why the pirates needed $20 million to protect themselves from hunger, Mr. Sugule laughed and said, “Because we have a lot of men.”

Mohammed Ibrahim contributed reporting from Mogadishu, Somalia, and Eric Schmitt from Washington.

I always get my annual flu shot. From MarketWatch:

Flu vaccine doses to reach all-time high this year

SAN FRANCISCO (MarketWatch) -- Americans ready to take up arms and noses against the bug that causes the seasonal flu have plenty of ammunition this year. The federal government expects a record amount of flu vaccine to be on hand at clinics, doctors' offices, drugstores and certain retail outlets in the next few months.

There are six manufacturers for this year's supply and no production bottlenecks reported so far, said Tony Fiore, a medical epidemiologist for the CDC in Atlanta.

"We've been lucky and were able to produce it quite effectively and ship it out in late August," he said.

Consumers who haven't done so yet can get vaccinated right away since the immune response lasts throughout the flu season, Fiore said. Influenza typically doesn't peak until February, but some years it starts early and strong, such as the severe flu season that struck suddenly in October, 2003. Vaccination is available later in the season, but it often pays to act sooner.

"Getting it done earlier is better for two reasons: It means you don't forget and don't find your physician stops vaccinating or doesn't have it," Fiore said. "The other is you never know when we'll have an early season. If you've made the decision to get vaccinated, there's no reason to delay it and risk having, in your particular community, a peak in October."

Each year, influenza sends 200,000 Americans to the hospital and kills 36,000 on average, most of them elderly or with compromised immune systems.

The CDC says anyone who wants to reduce their chances of getting the flu and doesn't have an allergy to chicken eggs can get vaccinated, but certain groups should make sure they don't miss out.

The agency recommends that all children age six months through 18 receive immunizations. The CDC also urges pregnant women, people over 50, residents of long-term-care facilities, those with chronic medical conditions and those in close contact with any of these vulnerable groups to get a vaccine.

Flu symptoms can include fever, body aches, headache, tiredness, sore throat, cough and a runny or stuffy nose. Other ways to limit the spread of flu are washing your hands frequently, covering your coughs and sneezes and staying home from work or school when you're sick.

Heaven talk.
1st woman: Hi! My name is Wanda.

2nd woman: Hi! I'm Sylvia. How'd you die?

Wanda: I froze to death.

Sylvia: How horrible!

Wanda: It wasn't so bad. After I quit shaking from the cold, I began to get warm & sleepy, and finally died a peaceful death. What about you?

Sylvia: I died of a massive heart attack. I suspected that my husband was cheating, so I came home early to catch him in the act. But instead, I found him all by himself in the den watching TV.

Wanda: So, what happened?

Sylvia: I was so sure there was another woman there somewhere that I started running all over the house looking.

I ran up into the attic and searched,and down into the basement. Then I went through every closet and checked under all the beds.

I kept this up until I had looked everywhere, and finally I became so exhausted that I just keeled over with a heart attack and died.

Wanda: Too bad you didn't look in the freezer. We'd both still be alive.

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.