Playing Defense

We’ve experienced less than a dozen trading days in ’08 and already the market’s breaking records of the bearish kind. For example, this year marks the third-worst start in history. Also, the S&P is an unlucky 13% off its October high and it's crossing lows not seen since the August subprime panic.

And on Wednesday we were confronted with another frightening figure: industrial production, a broad measure of the economy’s pulse, flatlined in December.

These freaky facts are giving investors the jitters, stoking fears of a full blown recession. But don’t get freaked-out --- get defense!

Whitney Tilson, Founder and Managing Partner of T2 Partners joins the panel for this conversation. Following is a synopsis of his main points.

He says there are opportunities in this market that could be the best he’s seen since late 2002  -- if you have a strong stomach! As events play themselves out, Tilson recommends 3 defensive picks.

1. Berkshire Hathaway

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Tilson says if you’re worried about Armageddon this could be the world’s strongest balance sheet run by the world’s greatest capital allocator.

2. Fairfax Financial Holdings

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Tilson likes its Credit Default Swaps book. They should make a fortune if subprime goes in the tank, he says.

3. McDonalds

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According to Tilson, it’s a stalwart because he thinks people will trade down to cheap food, and the company has good international growth.

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Trader disclosure: On Jan 16, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), (YHOO); Najarian Owns (C), (CSCO), (BIIB), (FRE),(MCD), (TIBX); Najarian Owns (AAPL) Options, (YHOO) Options, (WM) Options; Finerman's Firm And Finerman Own (CROX); Finerman Owns (GS), (TSO), (VLO), (WMT), (YHOO); Finerman's Firm Owns (MS) Options; Finerman's Firm Owns (MSFT) Options; Finerman's Firm Owns (MDY) Puts And Is Short (MDY); Finerman's Firm Owns Russell 2000 Puts And Is Short (IWM); Finerman's Firm Owns S&P 500 Puts And Is Short (SPY); Finerman's Firm Is Short (IJR), (IYR); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Tilson's Funds Own Berkshire Hathaway; Tilson's Funds Own (FFH), (MCD); Tilson's Funds Are Short (ABK), (MBI)