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Playing Defense

Wednesday, 16 Jan 2008 | 7:26 PM ET

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.

Playing Defense
Tips on playing defense in a volatile market, with the Fast Money traders and Whitney Tilson, of T2 Partners

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

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

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

3. McDonalds

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)

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