Jerry e-mailed to ask: "What stocks would you recommend buying during this downturn? XOM, COP, GE?"

This gives me a good opportunity to write a little about what I've been up to lately and what I'm thinking today. Of course, what I'm thinking today could differ significantly from what I'll be thinking tomorrow in this market.

As a quick reminder, I am not a day trader. Most of the positions I take are for the long-term though some are shorter-term opportunistic trades. In addition, I pursue a long/short strategy with most client portfolios. Part of the portfolio is long, and part is short. Where that split falls depends on the number of compelling short ideas I find as well as market and sector valuation (and the degree to which the government prevents me from shorting).

Obviously, the short portion of the portfolio has done well. I'd love to attribute that to my genius, but there isn't much you could have shorted recently and not done...it's because of my genius. Of course, a true genius would have held an even larger short position.

The long portfolio has been a mixed bag. It was designed to be defensive, and it had been up until this latest "baby and bath water" stage in which any semi-liquid security has been tossed overboard. The only things rising these days seem to be Treasury securities, gold, pessimism, some currencies, and the number of political ads on TV. The portion of our long portfolio that has done well is the exposure to cash, gold, the Japanese yen, and the Chinese yuan (renminbi). These positions have fortunately been the largest holdings in most portfolios. I wish they'd been larger still for they haven't offset the losses from the other long holdings.

With the decline in the market of the past 2 weeks, I've been gradually covering my short positions (SRS, QID, TWM). I have a few remaining (MS, BWLD, COF, AMZN, and HOG). I also still have some put options in some accounts on the QQQs. I anticipate closing most of these positions out in the near-term if the market doesn't spike higher (which would not be surprising). I'll probably keep the BWLD short a little longer as it hasn't come off its high too much, the valuation is still rich, cost (margin) pressures are building, and restaurant spending is a discretionary expenditure that is easy to rein in when times are tough. Buffalo wings are tasty, but I can put tabasco sauce on my tofu dogs and watch the game at home.

On the long side, I think the best long-term buys today are in some of the emerging markets and in the commodity space. Again, these should not be bought if you're looking to make a quick buck or if you're the obsessive type who monitors his investments every few minutes. They could easily fall significantly from here before finding a bottom, but if you are a true long-term investor, these are the areas I would focus on. Many of my long positions are in these two areas, and as I've indicated, I've been very gradually adding to them as they've come in, and I plan to roll the gains from the short positions into these areas.

As for emerging markets, I like China and Russia right now. You want exposure to China over the next couple of decades (probably longer) given their growth prospects and rising incomes, and you can get it today at a very reasonable price given the tremendous decline in their stock markets.