Heed the Warnings of the Three Bears

The second factor is the extent of the severe consumer retrenchment: "The housing price drop will virtually wipe out the 28% of home equity, on average, of all those who have a mortgage... Remember, 30% of all homes in the U.S. are owned free and clear, so they're excluded from this statistic."

"The third factor will be the impact [of this slowdown] on other highly leveraged areas such as commercial real estate, emerging-market debt and equities, credit-card loans, and even commodities."

In the end, says Shilling, look for the recession to run throughout this year and possibly into 2009, as well. His advice: Sell stocks, and buy only longer-term Treasuries -- a bet that interest rates will continue to fall, amidst continuing deflation in asset values. As for the Dow: "The 9,000 level is the next stop."

Howard Ruff

He's back: Howard Ruff, the super-bear of the 1970s, has just revised and reissued his bestseller of that era, which spent two years at the top of The New York Times bestseller list. It's now called How to Prosper During the Coming Bad Years in the 21st Century.

Ruff has updated his forecasts and prescriptions, some of which I'd argue against, but if you need historical perspective (as well as advice on storing dehydrated foods) you'll find interesting reading.

Most of today's investors don't remember what a long-lasting bear market looks like, or a long-lasting recession. And they don't remember the ravages of inflation.

Here's hoping we don't have to relearn those lessons. And that's The Savage Truth.

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting