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Dear Mr. Berko:

Dear G.E.:

The consensus is that the Dow Jones industrial average might have skidded within a few hundred points of the bottom in October, when it skirted the 7,700 level. Observers believe that the index will probably dance between 7,300 and 9,700 for a couple of years as it reacts to various new crises, such as credit card defaults, continuing lower real estate prices, lack of liquidity in the hedge fund sector, higher unemployment, lower corporate earnings, dividend cuts, state and municipal credit problems, a real decline in the gross domestic product and the failing economies in Europe, South America and Latin America.

Markets drop quickly but recover slowly. So I believe the Dow will probably need four to six years to return to the glory of the 14,000 level. Because these are unique times, there are no reliable data to guide future market decisions with an acceptable degree of comfort.

The yardsticks we once used to measure economic activities might no longer be valid. In other words, the size of the inch has changed. Today’s metrics, such as return on investment, net profit margins, operating margins, debt-to-equity ratio, price-to-earnings ratio, etc., might not enjoy the same validity they had in the past. The world’s economic landscape has changed, and today we find ourselves in uncharted territory.

I’m confident that consumer finance companies, investment banks and brokerage firms will not lead the Dow into the next decade. Nor will manufacturers of luxury goods, large electronic appliances, recreational vehicles, boats, ATVs, the travel industry, cruise lines, home appliances and furnishings, plus other goods and services that represent profligate consumption and are purchased on credit.

The era of feel-good spending and recreational shopping is ended. Millions of consumers who flaunted their toys have lost their jobs, can’t make the payments and are upside-down in debt. As a result, most of that “give-me, show-me, buy-me” demand has disappeared into the ether. So the most important industries in this New World Order (I used that phrase purposely) will be those that are increasingly vital as the world population continues to expand. The investment emphasis will be on companies that are involved in natural resources (natural gas, oil, water), infrastructure, electricity, health care, food production and necessary consumer products. These will be the hot investment sectors of the coming decades.

So you have two choices with that $166,000. 1. You can invest in Treasury notes and earn bupkis, or certificates of deposit and get a bit more of a yield. 2. You can take a portion, say 33 percent, of that money and nibble on some blue-chip and blue-chip-like issues that have imploded, some of which have attractive dividends. Because I think the Dow has either reached bottom or is within 7 percent of its bottom, I recommend that you straddle both sides of the fence.

Invest $83,000 in a CD and invest the remaining $83,000 in the following issues: General Electric Co. (GE-$17.99), yielding 6.9 percent; Pfizer Inc. (PFE-$16.55) which yields 7.7 percent; Johnson & Johnson (JNJ-$57.40) yielding 3.2 percent; E.I. du Pont de Nemours Co. (DD-$23.90) with a 6.9 percent dividend; 3M Co. (MMM-$59.91) paying 3.3 percent; The Southern Co. (SO-$36.45) with a 4.6 percent yield; BHP Billiton Ltd. (BHP-$36.52) at 4.5 percent; CF Industries Holdings Inc. (CF-$46.90) with a 0.9 percent yield; Dow Chemical (DOW-$18.99) yielding 8.8 percent; Baker Hughes Inc. (BHI-$27.31) paying 2.2 percent; Halliburton Co. (HAL-$14.75) yielding 2.4 percent; Procter & Gamble Co. (PG-$62.75) at 2.6 percent; Colgate-Palmolive Co. (CL-$62.47) with a 2.5 percent dividend; H.J. Heinz Co. (HNZ-$37.72) paying 4.4 percent; and Ralcorp Holdings Inc. (RAH-$55.18), which doesn’t pay a dividend. These are a few issues upon which you can nibble with a fair degree of comfort.

As the economy continues to slow down, consumers will be spending more of their leisure time at home. So you might consider two cable television issues, DirectTV Group Inc. (DTV-$21.55), which has no dividend, and Cablevision Systems Corp. (CVC-$13.98) paying 2.9 percent.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@comcast.net. © 2008 Creators Syndicate Inc.