1. Set Aside Emergency Cash: Make sure you have six months worth of emergency cash that is liquid and accessible. Put it in a savings account where you can easily get to it if you need to. Yield is not as important as liquidity.

2. Build Cash Reserves: Everything from cars to houses has plummeted in value – and prices are likely to get even cheaper over the next six months. When you find that dream home, you want to be ready to pounce, so try to keep a stash of cash reserves on hand for big-ticket items.

3. Keep an Investment Watchlist: If you’ve got potential stock purchases in mind, be sure to keep a list of them on your radar. Stocks are also likely to get cheaper before the end of the year. I’ve said this for a while now, but once the market corrects some more, we may be looking at the investment opportunity of a lifetime, so you’ll want to ensure that your capital is ready for action when the time comes. Look for great ideas now.

4. Get Stock Advice: If you need a hand generating investment ideas and tips on where to invest your money in this tough climate, get some professional advice and let the experts do the work for you.

Another way people are beating this sour economy is by turning their hobbies into income generators. Some people are selling handmade scarves, others offloading their stamp collections.

Our friends at The Sovereign Society have discovered a new hobby that allows you to passively earn up to $70,000 a year. You could pick up this hobby in a matter of minutes. If you’re interested, click here to learn more.

Investment writers and stock pickers, like everybody else, have to build a reputation. They have to grab your attention, make you sit up and think. And they do this buy giving out free stock market recommendations — often the best recommendations they have.

Here at ContrarianProfits.com, you’ll find a wealth of recommendations and investment ideas that cost you nothing except the time it takes you to read them. Here are some examples…

In our ETF section 12% Letter editor Tom Dyson, recommends cashing in on rising grain and livestock prices with two livestock ETFs that track the Dow Jones AIG sub-indexes for live cattle and hogs: CATL.L and HOGS.L.

In our International section Martin Hutchinson in Money Morning recommends two ways to profit form Japan and China’s recently forged trading alliance: Chinese automotive manufacturer Brilliance China Automotive Holdings (ADR: BCAHY). Brian says, “Brilliance China trades at a pricey 48 times earnings, as it has only recently returned to profitability in the highly competitive Chinese automotive market, but its long term prospects appear excellent.”

In Oil & Energy Brian Hunt of DailyWealth explains why investing in the oil services sector is a no-brainer. According to Brian: “When oil sells for $125 a barrel, it creates a two-pronged situation in the oil industry: 1) It encourages producers to turn on the pumps at full blast. This depletes fields faster… 2) It creates unbelievably large cash flows for the ‘biggies’ like Chevron, Gazprom, and ExxonMobil. And they can direct those cash flows toward finding more oil… It adds up to huge demand for pumps, drill steel, offshore platforms, pipelines, and valves.”

In Real Estate International Living’s Floyd Brown tells readers how to buy dollar bills for 67 cents, a piece that created huge buzz on the web. Brian recommends a hot REIT HRPT Properties Trust (NYSE: HRP). It traded as high as $13.40 in 2007. The huge drop in its share price since then does not change HRPT’s assets. Today you can own it for $7.34.

And in our US Stocks section you’ll find a tonne of free stock market recommendations, including what Ann Sosnowski of Taipan Daily calls “a perfect example of a ‘free money’ opportunity“: Hawaiian Airlines (HE:NYSE). Ann says, “At $50 per share, it’s a strong buy [...] Its debt is one-third of its assets, and it has very good leverage. Not to mention an annual dividend yield of 4.6%!”

For more free recommendations and ways to beat the market, feel free to explore our site. Who said there’s no such thing as a free lunch?

You see, most investors gobble the answers up, thinking, “If the Big Money is doing it, maybe I should, too.”

But I read the Big Money poll in exactly the opposite way… I know when the Big Money guys all believe the same thing, chances are great the trade is “full” already.

So if you read the Big Money poll right, it can actually be quite profitable. Let me explain…

In mid-March, Barron’s e-mailed the poll to money managers. About 120 replied, and the results came out over the weekend.

The most hated asset class (not surprisingly) was real estate investments. Only 8.1% of money managers considered themselves bullish on real estate. And the most loved class was Latin American stocks… Only 13.8% of money managers were bearish on Latin American stocks.

The “untrained” reader might take this to mean the right trade is to buy Latin stocks and sell real estate stocks.

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Funny, then, that real estate stocks are now the best-performing sector this year… Simon Property Group – the benchmark real estate stock – is up more than 20% year-to-date.

Meanwhile, the Latin American Discovery Fund, a collection of South American blue chips, is down for the year.

How can this be? The answer is simple…

When all the money managers are bearish, there’s no one left to sell that stock… With only 8.1% of money managers bullish on real estate stocks when the poll was taken in mid-March, there was nobody left to sell real estate stocks. With no one left to sell, they couldn’t go down any farther.

So here’s what happened: On March 14, Simon Property Group traded for around $86. Now – just six weeks later – it’s at $105.

On the other hand, the Latin American Discovery Fund peaked two days before March started, and it hasn’t done much since. It was everyone’s favorite in March… Why hasn’t it gone up? In short, there’s nobody left to buy – only 13.8% of money managers were bearish on Latin stocks when the Big Money poll was taken. Everyone who wanted to buy was already in.

Here’s the key: You have to wait for the extremes in sentiment. The old saying is, “The crowd is wrong at the extremes, and right in between.”

So let’s look at another example from the Big Money poll… One result was as lopsided as I’ve ever seen: Only 3.6% of investors are bullish on 10-year Treasury bonds. That means nearly all money managers believe long-term interest rates are headed higher.

With long-term interest rates currently below 4%, investors think rates can’t go any lower. After all, they haven’t seen them lower than that in their lifetimes.

But they’re ignoring history… Japan’s property bust started in 1990. Interest rates were “normal” then – around 6% to 7%. But as the property bust went on and on, long-term interest rates fell to 3% by 1995… and actually fell below 1% in 2003. Even today, they’re around 1.5%. Incredible!

All the talk is of inflation… and everyone expects interest rates to head higher. But don’t go betting the farm just yet. This trade is already full, and long-term interest rates could surprise you and head much lower. Already, interest rates on 10-year Treasuries have fallen from more than 5% in the summer of 2006 to below 4% now.

If you want to follow the crowd and do the “ordinary” thing, bet against real estate stocks and bet that interest rates will head higher. But by doing the ordinary thing, you’re destined for ordinary returns. If you want “extraordinary” returns, you must be willing to do something extraordinary.

One of my favorite hunting grounds for doing something extraordinary is Barron’s Big Money poll…

Good investing,

Steve

P.S. Talk about doing something extraordinary… In the latest issue of my letter, Sjuggerud Confidential, which came out earlier this month, I recommended a safe bank, with no exposure to U.S. real estate. We’re already up more than 20% – in less than four weeks! And I still think it’s a great buy. To learn more about this idea, click here.

Meanwhile, listed financials have gone from shaky to shaken.

That’s no coincidence. The fear surrounding banks sparked a stampede of financial capital. A lot of it has charged into the commodities sector. The tide of money flowing out of financials is gushing your way.

There are Always Good Resource Stocks…

But tangible assets…and resource companies…are a truly diverse bunch. They come in a variety of shapes, sizes, weights and uses. That diversity ensures there will always be something making gains. Commodity buyers always want more of something than there is available. That’s the beauty of resource investing. You have access to a constant stream of good investment ideas. It’s like a whole separate investment universe.

Unconvinced?

Well, the market was flat for all of February. But Alumina (ASX:AWC) was up 23% because Chinese aluminium demand sprouted wings. In the first half of March, the market was down 4.5%. But iron ore junior Midwest (ASX:MIS) had an explosive 20% gain thanks to a takeover offer.

Tangible assets are in a long-term bull market. Even when the whole share market is floundering… somebody, somewhere is making money in the resource sector. But in their haste for obvious profits, speculators can miss good opportunities.

There are two specific opportunities in particular we’re looking at. These come from two sectors of the Australian resource market that speculators haven’t blown up. Separately, they’re great companies. But together they combine two of the most profitable aspects of the resource boom, with synergies to boot.

We don’t expect this opportunity to stay at the price it is today, though. Money moves towards quality, and this pick is of a high standard. With that in mind, let’s quickly recap the exodus from financials to resources.

Funds Look for Inflation Safety in Commodities

Apart from the fact that resource stocks are in a historic bull-market, a lot of this buying motivation comes from inflation. Commodities tend to outperform other asset classes in an inflationary environment. Speculators are using the resource market as a shield against rising prices.

This is evident in Exchange Traded Funds (ETFs), which track the prices of the commodities they hold.

The Goldman Sachs Oil ETF has added around 22% since last year’s calendar came off the wall. The PowerShares DB Agricultural Fund is up 18%. StreetTRACKS gold ETF (NYSE:GLD) is up 16%.

Here’s an interesting one… the Powershares DB Base Metal Fund (AMEX:DBB). It’s up 13% over the last three months, despite most metals taking a breather.

These high commodity prices are pulling headline companies up with them. Global miner Xstrata (LON:XTA), for example, is up 7% for the year in London, despite the London market being down 13%.

Speculators have definitely moved into the hard asset market. But now that they’re here… what will they do next?

The Factors of Speculation

Different speculators hold different positions on the market’s direction. You could easily identify dozens of difference factors, all of which have the potential to drive the price of oil, wheat, or copper up and down. That leads to a lot of uncertainty, and a lot of people buying and selling.

But there are a few factors that matter more than the others. Here’s a short list of what the speculators are looking at, and what they mean for commodities in general.

1. Profit-taking from commodity gains

This one is unavoidable. Given that commodities are in an uptrend, every now and then speculators will choose to realise their gains. It will mean tangible assets occasionally take a break from the main uptrend.

2. Gloomy economic news from the US

A global recession would certainly cause demand for commodities to fall somewhat. It’s one reason traders have to sell commodities. We don’t agree that it will kill the boom. But there will be times when some commodity holders lose their nerve and sell.

3. Investors’ continuing need for an inflation shield

Given that the Federal Reserve slashed both headline rates by 75 points less than two weeks ago, there’s still plenty of reason to think people will buy commodities to protect themselves from inflating prices. Low interest rates mean cheaper credit. An easy money supply always leads to inflation in the long term. And you can bet that central banks will continue to heave money at falling financial markets to slow the rot. That’s inflationary.

4. Direction of the US dollar

The US dollar will probably head downwards in the long-term, but at the moment it could move either way. The dollar was so depressed before the Fed cut rates that it actually rebounded. This, we feel, is a temporary break against the norm. And when the dollar moves down, commodities quoted in dollars become more valuable nominally. Traders will buy commodities as a hedge against a falling dollar.

5. All types of market participants are willing to bet on the long-term commodity trend

Not just traders and investors, but consumers of commodities – like Chinese steel mills – will be keen to jump into the market and pile on inventories while piling is cheap. When commodity prices fall, there will be dip-buyers keen to make a thrifty purchase.

Looking at that list, it’s not hard to see why the price of grain futures or an oil ETF could fluctuate. Traders and hedge funds have a lot to think about. Those factors won’t all take precedence at the same time, of course. This adds to commodity volatility.

Predicting exactly when each will be most prominent is impossible. Don’t bother trying. Instead, read on. There are two corners of the resource market that have excellent potential for gains… and speculators haven’t taken advantage of them yet.