Mitch Tuchman
- http://www.marketriders.com

Whether it's a recession or an economic boom, one thing doesn't change, the need for energy. And until technology leaps ahead, coal is the largest producer of fuel for the generation of electricity in the world. It's also the most abundant fossil fuel in the United States. Coal is obviously not recession immune as people tighten the reigns on their lives and cut back on electricity consumption, but the shear necessity of electricity makes the coal industry fairly resistant. An investment in an exchange traded fund (ETF) that is centered on the coal industry is a great way to hedge your bets by investing in a pool of successful companies in the coal field.

Market Vectors Coal ETF (NYSE: KOL) seeks to replicate the price and yield performance of the Stowe Coal index, which provides exposure to publicly traded companies worldwide that derive greater than 50% of their revenues from the coal industry. With KOL you'll own shares of some of the most noted coal companies in the world, including Arch Coal Inc. (NYSE: ACI), which specializes in steam and metallurgical coal; CONSOL Energy Inc. (NYSE: CNX), a large provider of fuel for electricity in the United States; Alpha Natural Resources Inc. (NYSE: ANR), another leader in steam and metallurgical coal; and Peabody Energy Corp. (NYSE: BTU), an exploration miner and coal producer worldwide, as well as several other highly rated coal companies across the globe.

Market Vector charges only a 0.65% fee, a fraction what a professional money manager would charge you to analyze research and pick coal mining stocks with this level of global reach. Recently KOL has gone through a typical correction for this commodity sector, but then suffered a greater hit as Asia saw a 20% decline in spot prices for thermal coal. The result? A better deal for those currently willing to dive into coal as an investment. KOL is up 14%, so maybe there's some light at the end of the mine.

• 17.19%: AT&T INC(NYSE:T)
• 10.61%: VODAFONE GROUP PLC(NYSE:VOD)
• 9.47% : TELEFONICA SA(NYSE:TEF)
• 9.05%: VERIZON COMMUNICATIONS IN(NYSE:VZ)
• 5.01%: CHINA MOBILE LTD(NYSE:CHL)
• 4.94%: FRANCE TELECOM SA(NYSE:FTE)
• 4.57%: DEUTSCHE TELEKOM AG-REG(NYSE:DT)
• 3.98%: NIPPON TELEGRAPH & TELEPHONE(NYSE:NTT)
• 3.21%: TELSTRA CORP LTD (Other OTC:TLS)
• 2.71%: BCE INCNYSE:BCE)

1. Get Your "Sleep-At-Night" Allocations Right. The most important investment decision we make is what percentage of our nest egg to put into cash and bonds.

Everyone today wishes they'd put 100% of their money in cash or bonds. But bond investors shouldn't sleep as well as they think -- the protection comes at a very high price. Bonds provide the lowest rate of return and over the years. Inflation eats away a lot of the value of the monthly income. From 1925 through 2003, U.S. bonds only appreciated 5.4% per year, or 61 times, while stocks appreciated nearly 10.4% per year, or 8,000 times.

Stocks are volatile, but over long periods you get paid for the sleepless nights. You just need the time to wait out these markets. Money you need for the next five years should be in bonds or cash. The panicked sellers didn't get these allocations right. If you're 50 years old and lamenting over the equity values in your 401K, remember, you're not allowed to touch it for 10 years anyway. That's a long time!

My partner Ryan Pfenninger of MarketRiders has a great grasp on the current financial crisis. Ryan believes that we should follow the lead of Sweden in the early 1990s. Let's be clear. The $700 bailout bill rejected by the House of Representatives was a disaster. Nearly every member of Congress who spoke during the debate said they disliked it, but for some reason concluded that even though it wasn't any good, they should still vote for it.

The fun didn't end there. Several members of Congress talked about how mark-to-market accounting rules are causing this mess. Instead of having banks mark a worthless asset to zero; they would rather allow a bank to carry an asset at an artificially high valuation, prolonging this crisis. Marking assets to higher valuations than they're worth does not solve the problem. It merely turns a gaping into a constant wound that will eventually cause the institution to bleed out.

Let's get real. Taxpayers don't like this deal because it bails out Wall Street and will likely not solve the problem. Shifting capital from taxpayers to banks without an actual plan to fix foreclosures and asset valuations is a net wash, not a solution.

Ryan proposes a simple solution that he believes could work:

• Are we really going to rely on the same people who led us into this mess to get us out? It is entirely possible that had Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) reform legislation been passed two years ago, the scale of the current economic mess would be greatly reduced.
• Several financial experts are discussing how the taxpayers will make money on their $700 billion investment. But investing in bad mortgages is not like investing in distressed companies. If you invest in a distressed company, the company can right itself and provide a good return. If you invest in a second mortgage that was written on a house valued at twice what its currently worth, the odds are slim you will ever see a positive return on that investment.
• Secretary Paulson's plan would entitle him to purchase assets from any financial institution – not just AIG. When asked if this would allow him to purchase from pension plans, he said yes. How does purchasing from a pension plan help the homeowner facing foreclosure or the bank who can't afford to lend any money?
• The plan does not seem to differentiate between the types of loans that the government can purchase. There is a big difference between purchasing a first mortgage on a property and purchasing a no-documentation loan or home equity line of credit. We may have a chance of recouping money on the first mortgage; we have little to no chance on the others.
• Where are the details? Three pages aren't enough for anyone to feel comfortable spending this kind of money.

Barber and Odean obtained trading data from a discount brokerage for over 35,000 households and analyzed investing patterns for six years to test whether overconfidence leads to more trading and lower returns. Since in areas of finance psychologists have proven that men tend to be more prone to overconfidence, the genders were separated so that their trading habits could be studied individually.