Today’s guest post is by MoneyEnergy.

Unless you’ve been on vacation on one of the earth’s poles for the last month, you’ll know that the last few weeks have been great in the markets.  More than four straight weeks of gains have led many commentators to begin asking whether we’re starting to see signs of a recovery and have caused many market-timers to wince with the knowledge that they missed out on one of the quickest and gainliest recoveries in decades.  But how long will this bear market rally last?  Is it just the short-term booster effect coming from the trickling-down of the Obama stimulus throughout the US economy?
Whatever the reasons and however long it’s going to last (I’m still reading articles about the imminent “recovery”), I think it’s safe to assume that we may yet retest the lows.
I take the commentary of analysts like Peter Schiff and Gerald Celente seriously.  Schiff was wrong about the manner in which the dollar rallied owing to so much investment looking for a safe haven, but that’s because Schiff overlooked the effect produced by not everyone’s knowing about the state of the US debt – or even if they did know, investing in greenbacks anyway because of a perception of them as being more of a relative safe haven compared to the Euro (here I interject: why do these discussions on currency options always ignore the Canadian dollar?  Canada’s balance sheets completely upstage those of the US, and Canada’s banks are more sound even than Europe’s).
Peter Schiff hasn’t changed his vision much over the course of the economic debacle.  He sees things as basically proceeding par course.  Sooner or later those Chinese and Japanese won’t want to buy any more US securities. In a sense, Schiff’s view still makes sense – as we saw just a few weeks ago the Chinese Premier Wen Jiabao proposing a new world reserve currency.  So Schiff’s prognostications could still be right on course.
Gerald Celente has been in the mainstream media much less than Schiff, and maybe for good reason – although he holds the same views, his visions of the future are much, much bleaker than Schiff’s.  Celente isn’t afraid to say he thinks we’re going to see a major rise in bad crime in the US and that we’re headed into the Greater Depression.  I’ve heard alot of doom and gloom stories, but only Celente really scares me.
So what if Shiff and Celente are still right?  They’re ignoring this bear market rally – maybe you should too.
Here’s what I recommend doing now while the markets are still relatively stable and there is less overall volatility in trading.  In other words, because we’re in a period of slightly more optimism about the economy and slightly better consumer sentiment.

• If you need to move money in and out of accounts, do this now while all banks are still open and there is less fear of runs
• If you plan to stock up on any key items/supplies, do it now while supply lines are still running
• If you have been waiting to cash out of the markets, now is a good time while values are back up (I don’t recommend market timing, but sometimes we do need the cash)
• Take a look at your gold dealers – might be easier to place orders now and get them quicker
• It’s a good time to sell off that “stuff” you no longer use: ebay, craigslist, garage sales
• Make sure you have your emergency cash in place

In other words, treat this moment as a brief sunny respite on a rainy day, a chance to run across the street without getting soaked.  Because we shouldn’t be so foolish as to think the rain is not going to come back. At the very least – even if you don’t think we need to be thinking about more survivalist scenarios – stock up your cash savings now and keep them aside for more bottom-fishing when the time is right.

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.