Here’s an interesting article from Bloomberg. I don’t agree with it, but then again I didn’t make 74% returns last year, nor do I run a multi-billion dollar fund.

Steven Leuthold, whose Grizzly Short Fund makes money for investors by betting companies will fail, says he wouldn’t invest in his own fund now because the U.S. stock market is close to bottom.

Leuthold, who helps manage $3.2 billion as founder of Minneapolis-based Leuthold Weeden Capital Management, told investors to keep money out of the Grizzly fund last week; it rose 74 percent in 2008. He joins Bill Fleckenstein, who shut a 13-year-old bearish fund in December, and Marc Faber, who covered bets against U.S. stocks, in talking down short selling.

Leuthold says the Standard & Poor’s 500 index, which has lost 54 percent since October 2007, may rise 40 percent this year because the U.S. economy won’t fall into a depression and stocks are the cheapest they have been in 24 years.

“I personally would not have an investment in the Grizzly fund because I think we’re so close to a major market bottom,” said Leuthold in an interview. “Every investor ought to be considering putting money into equities.”

Short sellers can profit from falling stock prices by borrowing a stock and then quickly selling it. If the prices then fall, they only have to pay back the stock at the lower price, pocketing the difference.

SP 1,000?

The first simultaneous recessions in the U.S., Europe and Japan since World War II pushed the price of the SP 500 as low as 10.2 times earnings from the past year, the cheapest since 1985, according to data compiled by Bloomberg. About $1.2 trillion in bank losses tied to subprime mortgages sent financial companies in the SP 500 down 82 percent from the February 2007 high, making them the cheapest relative to book value, or assets minus liabilities, since Bloomberg began tracking the data.

Leuthold, 71, said investors have become too concerned about the economy. Comparisons between the current slump and the Great Depression are exaggerated, said Leuthold, who predicts the SP 500 will rally to at least 1,000 this year.

Fleckenstein, president of Seattle-based Fleckenstein Capital Inc., says that while stocks may advance in coming months, they’re likely to lose the gains as the recession worsens and unemployment climbs.

The 55-year-old investor, who plans to open a fund that bets on both stock declines and gains later this year, said if he were managing a fund today he would be “doing a whole lot of nothing” and would have few short sales.

So what am I invested in? I still think gold and oil stocks will outperform in the long run. I’m also shorting a few companies that I think will go bankrupt. One of them is a American College Communities (ACC), which provides luxury student housing. They bought an awful lot of real estate at the peak. Check out this great analysis at Stripnomics blog.