Previous Columns
9:00 AM EST, Wednesday, October 22, 2008: Third quarter earnings stink. The world economy is shrinking. Hedge funds are suffering huge redemptions, putting huge and continuing pressure on stock prices. What with margin calls and declining earnings, the outlook for the stockmarket is dire. As I've said a million times, you need to be 100% out of the market -- except for a small percentage of your portfolio, which should be devoted to shorting stocks. The easiest way to short stocks is to buy UltraShort PowerShares. Recognize that shorting is not for the faint of heart. Ultra-shorts typically bounce twice what the underlying stocks do.

Here's yesterday's performance on my favorite UltraShort PowerShares. This chart is, as usual, not complete. It comes from QCharts. (They're hopeless.) The DXD rose $4.98. The EEV was up $16.46. Only telecom was down on the day.

Sick humor abounds: A friend wrote a note to his bank:

"Dear Sir / Madam,

In view of what seems to be happening with banks at the moment, please clear up some confusion... if one of my checks is returned marked "insufficient funds," how do I know whether that refers to my account or your account?

Yours Truly"

Professor Nouriel Roubini (home page) is the NYU economics professor who's head of RGE Monitor. He predicted the mess we're now in long before anyone else did. He was a guest on CNBC this morning. His comments were thoroughly depressing. They included,

+ The worst is very much ahead of us.

+ Housing is a disaster. 40% of homeowners have a negative worth in their homes. There's a a huge incentive to walk from your home.

+ There is a risk of a systematic financial meltdown worldwide.

+ We're facing two years of negative GDP growth. This will be the worst recession in decades.

+ Emerging markets are collapsing. China's GDP growth will decline from 10% to 6%.

+ Unemployment in the U.S. will rise as a high as 8 1/2% to 9%.

+ Default rates on speculative grade bonds are going to skyrocket. This is gong to get really ugly. Two years of negative GDP growth.Worst recession -- economic -- falling unemployment

+ Corporate dividends will be cut. Hence chasing high-yielding stocks makes little sense.

I'm guessing you can view a replay of his remarks on www.CNBC.com later today.

I repeat do not buy "cheap" stocks, or stocks that appear "cheap" because of a low P/E or a high dividend yield.

Talking about bond defaults, check out this chart from this week's Fortune magazine.

Yes, you read right. That's a sixfold increase in insurance premium on GE bonds. That's General Electric, not some schlock fly-by-night company in the back of beyond.

Hank Paulson is on Charlie Rose today (a repeat from last night) at 1:30 PM today. Check your local TV listings.

Do not invest with Ken Fisher. He runs something called Fisher Investments. It takes money from investors and puts them in individually-managed accounts for which he charges something like 1.25% of asset value. Fisher does a brilliant job promoting himself and his investment management services via books, a column in Forbes, heavy Internet advertising etc. He performs perfectly fine during bull markets and perfectly miserable during bear markets (like the one we have had this year). He seems to like "buy and hold" which, of course, suits his fee structure.

I have readers who are happy with him. I have readers who aren't happy with him. Personally, I prefer simpler, cheaper, more flexible investments, like some of the index funds.

Splurging on clothes. The Republicans have spent $150,000+ on clothes for Sarah Palin. Quipped my wife, "Why they need to spend that much is beyond me when all they dress her in are red jackets and black skirts." Personally, I wonder who gets to own the wardrobe when it's all over? Is it taxable to Sarah?

Some quotes appropriate for today:

+ There cannot be a crisis next week. My schedule is already full. -- Henry Kissinger.

+ For every problem, there is a solution which is simple, neat and wrong. -- H. L. Mencken

+ Too much of a good thing is wonderful. -- Mae West

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.