Weekend Edition

"I'm happy not to be a hero now," James Tisch, one of my favorite investors, told the Wall Street Journal. With more than $12.5 billion in cash, Tisch has continued to stand on the sidelines, waiting and watching.
 

His investment holding company, Loews, is one of our longtime favorites. Why? Because Tisch has that rarest of commodities on Wall Street: humility. "If there's nothing to do, do nothing."

 

That's the most valuable lesson you'll ever learn about investing: You only have to swing at the fat pitches. It's utterly true, it's intuitively simple... and yet it's nearly impossible for most people to sit on their hands until a great investment comes along.

 

Unlike Tisch, people don't pay me to do nothing. You expect my best ideas on what actions to take, whether the market is going up or down. My best investment advice continues to be: Buy the highest-quality companies you can find when they are trading for prices you know are totally safe. My newsletter lists at least half a dozen as "buys." (Click here to learn about one of my favorite ideas right now.)

 

Also, sell covered calls against these positions (and your other long positions) when the premiums are attractive. This will generate income for you and offset any temporary weakness in your results. Hedge your portfolio buy owning gold, or better yet, silver. And sell short highly indebted companies whose shareholders have no possible way to salvage their investment.

 

If you've taken these actions, the last week shouldn't have bothered you at all. You could have a drink with James Tisch and be just as at ease.

 

Lakshmi Mittal, chairman of ArcelorMittal (the world's largest steel company) said, "I can say with considerable certainty that the volatile years of boom and bust are now relegated to the past. We have succeeded in transforming ourselves into a profitable and sustainable industry."

 

Sounds eerily similar to private-equity titan Henry Kravis proclaiming we were in the "golden age" of private equity last July... months before the private-equity bubble burst.

 

We're usually reluctant to recommend mutual funds. According to David Swensen, superstar manager of the Yale Endowment Fund, 96% of mutual funds miss their benchmark returns. You'd be better off owning an index fund. You'd cut out the middleman, earn better returns, and pay lower fees.

 

But we trust a few mutual funds with our money. We greatly respect Third Avenue and Tweedy, Browne, for example. And Dan Ferris recently recommended the "greatest mutual fund in the world." Click here to read Dan's essay on the fund.

 

Condo Vultures, the Miami firm that buys up cheap south Florida real estate, now has almost 4,400 properties for sale. Four hundred of the homes are priced at less than $150,000, and the cheapest is only $31,000.

 

A great quote from www.PrudentBear.com... "A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him." – John Maynard Keynes

 

Right now, plenty of "sound bankers" are looking for work... Goldman Sachs will cut 10% of its investment-banking division through 2008. And Citigroup is in the midst of a 10% reduction of its 65,000-strong investment-banking staff.

 

Airlines are in trouble, but the CEO of Irish airline Ryanair may have the perfect solution. Click here to watch his colorful response. It's R-rated, so don't say we didn't warn you.

 

In 1982, Jim Rogers invested heavily in Germany. The German market crashed in 1962 and moved sideways for 20 years. Meanwhile, the German economy had boomed, and companies' revenues and earnings were soaring. Rogers saw the perfect setup for huge profits. After Rogers' investment, a business-friendly government took power, and he tripled his money in three years.

 

Jim Rogers just bought into a new stock market three months ago... for the first time ever. And 12% Letter editor Tom Dyson took note.

 

Dyson found the perfect stock to play this trend. It's cheap, and it's about to pay a $500 million dividend to shareholders. He expects at least a triple in the coming years. To learn more about The 12% Letter and access Dyson's latest recommendation, click here...

 

Regards,

 

S&A Research

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• The Commodity Investor Q&A
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• Traders Should Get Ready to Buy
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• The Best-Performing Stock of the Last Half-Century
  By Ian Davis Monday, June 23, 2008