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Protecting Your Portfolio

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If it seems to you like the Dow is lurching higher and lower in an effort to find a middle ground you might be missing the big picture. More likely the Dow reflects that fact that investor fears are shifting.

Weakness in stocks is no longer just about landmines in the banking system. Now it’s something much more fundamental. “I think the concern is the depth and duration of the downturn and the effect it's going to have on earnings, " says John Thornton, co-portfolio manager at Stephens Investment Management Group.

For further insights we turn to strategic investor Dennis Gartman, author of The Gartman Letter.

"I fear we are heading toward Japan's fate,” Gartman tells our producers. In other words an economy guided more by the government than the free market.

“There’s fear that the golden age of free markets are now behind us and that left-of-center philosophies are on the rise,” he says. “That translates into a fear of higher taxes and rising protectionism.”

Gartman expects these big picture items will weigh heavily upon prices now, and may for a long, long, while into the future.

How do you trade it?

Gartman tells us, “Own the best-quality stocks that pay the best covered dividends and hedge those trades by buying the ProShares UltraShort S&P500 ETF or the other inverse ETFs.

He also says, “Watch what the yen euro cross is doing. It keeps going in favor of the yen and as long as that happens stock prices here, Canada, Germany and Japan are headed lower.”


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Trader disclosure: On Oct.22, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money trader; Macke Owns (SDS), (UUP), (MSFT), (BNI), (MCD); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman Owns (GS), (PM), (RAI), (DEO); Finerman's Firm Owns (MO), (MSFT); Finerman's Firm Is Short (BBT), (COF), (IYR), (IJR), (USO), (SPY), (IWM); Seymour Owns (AAPL), (BAC), (EEM), (F), (MER)

Gartman Owns (KBE), (SDS); CIBC Gartman Index Owns Australian Dollar And Is Short Euro

CNBC.com with wires