What will housing cause? If housing gets bad enough to cause a recession, what will happen? First of all, a mild recession like the one we had in 2001 would not be the end of the world. A little bigger one like 1997 would hurt a little, but we'll come through fine. Bottom line: I think housing will have a long slow slide, and the stock market will have a couple of bumps before it takes off.

I think commodities will continue will give up most of their gains for the last year or two on recession concerns plentiful supply.

This supply needs to be watched carefully to determine which industries can keep up with demand and which ones can't. I think that oil has the most oversupply of any of the major commodities. Since may, Saudi Arabia has been cutting back on production. Just today, it was announced that Nigeria is cutting back production 5% and Venezuela has already cut back by 22%. I am hoping to see a price war when greedy egomaniacs like Chavez realize that they can't stop the slide in prices by cutting back on production.

My bet: oil at $30 a barrel. Well, that's for the shock value. I think a more reasonable target is $39 (half of the peak).

How do we cash in on this bet? United Airlines (UAUA). Their profitability is leveraged to the price of oil. If oil declines, their 0.40% profit margins may pick up a point or two. Each point is worth 60% of current market value, and fuel costs are about 1/3 of total costs.

Also, gold stocks keep looking better and better. Gold is back over $600, but most large gold stocks are sitting near their yearly lows. I think the best bet is the Gold Miners index ETF (GDX). The ETF combines the relative safety of the larger gold companies, along with the smaller takeover target companies.