What's the best investing approach for the stock market right now?

Unless one can make it a full time job and have 10-15+ years trading experience this is what some options are:

1. Stay in cash. If you're not in cash, prob little too late?

2. Dollar Cost Average each month or bi-monthly in the S&P 500 Index and wait 15+ years. Use a Roth IRA.

3. Safe Money:
FDIC backed CD's under 250k until Dec 2009, then 100k bank deposit guarantee. Next US Treasuries, however the interest is close to zero, but it is the safest of all investments (unless the USG defaults on their debt â€“ if that happens kiss the market and economy good bye. Welcome to WWIII).

4. For the risk taker - trader:
Take a small amount of "risk money" - money that if you lose you will still be fine, and find stocks that have high cash flows, little to no debt, a PE of say 4-8, a PE that is the lowest to their competitors, that has good cash on their books (they don't rely on credit), and maybe trade them if they fall 10-15% in a day.

5. For the Super Bears:
One needs to determine whether the market will trade down do 7500, or then 6000 on the Dow, and 768 on the S&P 500 Index. If you think this will occur (I give it 50/50 chance as of today), then one does not want to be in stocks, and perhaps buying ProShares UltraShort S&P500 (ETF) (NYSE:SDS). This ETF moves 2x the movement of the market. If you are a savvy options trader, put buying is the way to go as you know your max risk before you enter the trade.

I have not taken a strong position either way (slightly still Bearish, but definitely not Bullish). At this moment if we go down further, (prob) I would think that we may retrace all of Friday's 11-21 gains, and then some within a week or two tops.

6. Wild Cards:
Citibank, US auto industry (GM, and F mostly), other major banks (BAC, JPM). It is absolutely critical to watch what is going on with these companies and industry.

7. Next Week: Thanksgiving
I expect very light trading volume all during Thanksgiving week. We already have light volume now, which is actually a Bearish indicator. Expect some more volatility. I have no idea if the market will be higher or lower by the end of the week. This is a day to day, minuet by minuet forecast. Itâ€™s like, who is going to win the football game that just started? You donâ€™t really know for sure until the last part of the 4th quarter. I have puts of the S&P and put position on Citi. Nothing major.

8. Super Rally?
I think there is a fair chance that we could have a massive short covering rally at some point, where a 1000 or 2000 upwards move in the Dow is possible. During ALL Bear Markets, there have been periods of sharp rallies, that make people think everything is fine again. Then that move turns lower and lower than before the rally. This is called a â€œBear Trap.â€

9. When will the economy turn around?
Two words. Who knows? It may take at least 1 or more years for the economy to turn around. Some people think this will be a multi-year bad recession. I am leaning in that camp. Most of the people who I follow in the market and who tend to be right a lot, believe that the economy won't have chance to turn around until maybe early to mid 2010.

This is in part due to the fact that home equity has been wiped out for many people; the value in their homes have plummeted, retirement accounts have lost 40-60% across the board; credit is very hard to get; jobs are still at risk; unemployment is rising sharply; consumer confidence and spending has plunged, and many people are still burdened with a ton of debt. This does not make a good scenario for any improvement in an economy.

10. Bail Me Out With a Blank Check?
Next, the US Gov is "bailing out everyone" - taking on tremendous amount of debt and financial guarantees ($5 Trillion FNM/FRE, $2.1 Trillion FED loans, $700 Billion Tarp fund, few hundred billion more including BSC, AIG, etc. This does not include help for the auto industry. And rest assured, $25 Billion will NOT repair the auto industry. Everything that we have been told about the bailout has not gone as planned. This unlimited bailout program has not and will not work. The US Gov has the worst record for money management.

11. Nasty Bear Continues to Bite?
I was doing some reading in history the other day (as I do often), and we are in the #2 biggest Bear Market ever; only the Great Depression was worse than today's economy.

The future direction of the economy will have a big influence on how Obama and his team manage this mess. If they want to increase taxes, or socialize the economy further, then I can tell you that we will have a prolonged recession, and higher unemployment to say 8-14%.

This past week, I actually became concerned that we were increasing our chances again to a total economic collapse. Citi (C), Bank of America (BAC), JP Morgan (JPM) stocks have especially plunged.

Citibank (CitiGroup) (C) is at a dangerous level. Citi has $2 Trillion in assets but who knows what they are really worth today. Citi also has about $2 Trillion in debt. The US Gov loaned $25 Billion to Citi about a month ago. As of Friday, 11-21-2008, one could buy the entire company for about $20 Billion.

Bank of America (BAC) has more assets that Citi, but it also has more debt. BAC bought Countrywide (CFC) last year (a mistake in my view) - they over paid for it; and bought Merrill Lynch (MER) recently at about $29/ share. MER is now currently under $9.00.

All of the financials (BAC, MER, C, JPM, MS, GS) in the $700 Billion TARP fund program have lost 50% or more of their market value since the bailout. WFC close to 50% loss.

If the gov thinks they are going to bail out C, then BAC, and or JPM, that would put such a huge strain on our deficit that we would prob see a repeat of the 1929-1930's.

I know that sounds pretty bad, but it is a possibility, but not a certainty at this time.

Louise Yamada and Peter Schiff have pretty bearish scenarios, but have been correct for the last several years. I have been bearish for the last 2 years and began getting bearish in the spring of 2004 when the FED began raising interest rates.

Who not to listen to?
I would avoid listening to all the mutual funds managers; they are wrong 99% of the time. This year 99.9% of all mutual funds are in the red, there is the proof.

Good Show.
There is no spin; they (professional traders) call it like it is.
http://www.cnbc.com/id/15838499/

---see my bio for background.