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#4 You can also look into an actively managed short fund like Prudent Bear Fund [BEARX] (Dallas, TX 214-696- 5474; see insert), which is designed to benefit from a declining stock market. The fund maintains short positions in individual stocks and indexes and also buys put options. The fund is about 70% short. This short position typically does not vary greatly, says president David Tice. The fund maintains some long positions, which account for up to 15% of its assets. Longs include special situations such as certain small cap companies and natural resource stocks such as gold and silver mining companies. The fund is no-load, about $160 million in size. Mention EWI when you call, and they will send you an accelerated prospectus. Or, email info@prudentbear.com with EWI in the subject line. Another good bear fund is the Gabelli Mathers Fund (Bannockburn, IL 800-962-3863). It is conservative, so it is more attractive if you are unconvinced of the bear’s imminence or severity. The fund also offers tax-sheltered gains due to tax-loss carryforwards. Visit www.gabelli.com/funds/products/1726.html.

#5 Make sure you are using a safe bank. U.S. banks lend out an average of 75% of their deposits, which means that if 25% of their customers go to the window, they will have payout difficulties. At some, the ratio is more than 80%, and these banks will be particularly susceptible to runs. Worse, many major national and international banks have a huge exposure to derivatives such as futures, options and even more exotic leveraged instruments. We are not experts on banking safety. However, a company named SafeWealth Ltd., which specializes in this field, can help you (see #9 below). If you must bank in the U.S., SafeWealth says that Farmers’ and Merchants’ Bank (302 Fine Ave. Long Beach, CA 90802, 562-437-0011) appears to be substantially safer than most, perhaps the safest. We would add that relatively safe banks may become even safer during difficult times. If they have the sense to inform the public of their relative safety, depositors in a developing financial crisis will move funds out of weak banks into stronger ones, making the weak ones weaker and the relatively strong ones stronger. IDC Financial Publishing Inc. (Hartland, WI, 262-367-7231) publishes quarterly financial ratings that track the financial performance and safety of all U.S.-based banks and savings and loans ($435 annually). Research reports on individual institutions are $45.