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The following two-part article puts forth ten stock ideas that I believe would be better off in your investment portfolio than one comprised primarily of Certificates of Deposits (CDs) or bonds, or even government treasuries. This is not to say that CD's do not have value or offer some level of security, but they are long term losers.

A basket of high yielding-high quality stocks can offer a higher return, better tax advantages, and the potential of significant appreciation for those with a long time horizon. Five year CD earning 4%, or a utility stock? I pick the utility every time.

My wife sent me the following quote from Ambrose Redman that I thought would be worth sharing with readers: "Courage is not the absence of fear but rather the judgment that something else is more important than one's fear."

It seems that might be extended to one's view on investing as well. What is really important, the short term or the long term, growth or value, the promise of riches or the hope for stability? In each case I would favor the latter over the former and this brings to mind one of my pal Warren's lessons: Do not buy a stock unless you would be happy to own it even if the market was closed for ten years.

Berkshire Hathaway (NYSE: BRK.A and BRK.B) is certainly a candidate. Take a look at last week's Chasing Value: Considering Berkshire Hathaway... again. However, it does not pay a dividend. The following five quality stocks do:

Over the summer, my twelve-year-old son proclaimed that he was going to be the world's first zillionaire! I had to explain to him that if he achieved that lofty goal he would be the only one because that is more capital than exists today; unless he meant Zimbabwean dollars. I suggested that long before he owned the whole planet there might be a few objections here and there.

This got me thinking about my pal Warren, a frequent topic of conversation in business and investment circles, and how he amassed such a great fortune over the past five decades.

He is a long way from owning the world but he has started to expand his horizons to the international scene. He has bought and sold PetroChina (NYSE: PTR) for a tidy $4 billion dollar profit and he has been hedging against the dollar for the last few years with mixed results. He bought an Israeli metal fabricator and he has splashed about in Europe and Asia.

If you read Berkshire Hathaway's (NYSE: BRK.B) annual reports you will find the chairmans letters, where Buffett discusses both his successes and his failures. It is his failures and the fact that he does not make the right call every time that I wish to draw attention today. BloggingStocks promotes much debate, sometimes name calling, and sometimes worse. However, it is important to understand that even the best investors make mistakes.

The stock market was down yesterday and it is down again today. Bearish sentiment is roaming through Wall Street right now, so I thought I would look back on another occasion when the market was going through similar turmoil and I wrote about the following eight stocks, which I thought would be "safe havens" in such a storm.

Six of the eight did well and two did not, and of course one of those two was a disaster. Among the losers, I do not think anyone is fretting about UPS, which is still one of the few triple-A rated companies along with Berkshire Hathaway. It has been well reported that the slowing economy and higher fuel prices have been the major culprits affecting UPS's earnings. In the case of WaMu, it's demise has also been well reported, but at the time I recommended it WaMu had a stellar reputation of growth and high yield for over two decades. There is no hiding, it turned out to be a lousy pick and an ANTI-SAFE Haven

NOT SAFE:

United Parcel Service (NYSE: UPS) closed Monday at $65.30 down from $78.40; a 16.71% loss

Washington Mutual (NYSE: WM) closed Monday at $4.21 down from $45.50; a 98% loss.

Fortunately the remaining six picks have done very, very well. If you had bought the pool, the average gain over the last two years would have been 7.14%. Adding the dividends over the two years would have raised this to 13.14%.

U.S. stock futures were higher Friday morning, indicating stock markets could possibly extend Thursday's rally as the dollar rose and oil prices fell further. The dollar continues to make gains on the back of growing evidence of global economic softness. Still, several economic readings are due out today, including the New York Empire State manufacturing index , capacity utilization and industrial production -- all before the opening bell.

Retail will be in focus today after two Kohl's Corp (NYSE: KSS) and Nordstrom (NYSE: JWN) reported late Thursday, and J.C. Penney (NYSE: JCP) and Abercrombie & Fitch (NYSE: ANF) are due to report before the opening bell.

Kohl's Corp shares could start higher as premarket indication has them trading 2.3% higher, while Nordstrom's are trading 4% lower in premarket action. Kohl's quarterly profit fell 12% from a year ago, but the retailer lifted its fiscal year profit forecast. Meanwhile, upper scale Nordstrom, reported a 21% drop in second-quarter profits and cut full year outlook.

ANF said second-quarter profit fell on lower sales of jeans and T-shirts and forecast full-year earnings per share that trailed some analysts' estimates. JCP also saw profit decline but beat estimates and issued lower guidance.

Autodesk (NASDAQ: ADSK) shares are trading 10% higher in premarket action after the design software maker reported stronger-than-forecast second-quarter earnings Thursday after the close.

After seven months of tracking my 2008 picks -- Wham! -- I went from beating the indices and Berkshire Hathaway (NYSE: BRK.B) to being humbled by the market. However difficult it is to display your failings, once again I will share all. This is the low point since I posted the original story Chasing Value: Final list -- 8 stocks for 2008.

Only Reliance Steel & Aluminum (NYSE: RS) remained in positive territory, down from five stocks that were up in the last report. Sometimes, the reasons for the downslide were more obvious than they were in the cases for my picks. The cutting in half of Valero Energy Corporation (NYSE: VLO) has been reported often, as the largest independent oil refiner in North America has had its profit margins squeezed.

Loews Corporation (NYSE: L) has been hurt by its insurance interests and helped by its holdings -- a 51% stake in Diamond Offshore Drilling, Inc. (NYSE: DO) that has been doing well as the world remains desperate for more oil and natural gas.

The gap between the Dow Jones Industrial Average, Standard & Poor's 500 Index and the technology heavy NASDAQ Composite Index is narrower than in the past.

Mark your calendars: September 29th, 2009 will mark the debut of the long-awaited official biography of Warren Buffett: The Snowball: Warren Buffett and the Business of Life.

The list price is $35, but Amazon has it for $23.10, giving it a price/pages ratio of .023. This compares favorably with The Warren Buffett Way, which has a price/pages ratio of .037. Buffett would be pleased with the value proposition here.

The USA Today reports that the author, former insurance industry analyst Alice Schroeder has spent "thousands of hours" with Buffett, and also interviewed his friends extensively, and was given broad access to his records.

There are only a few topics that I'd be able to read 976 pages about without losing interest: I suspect that Mr. Buffett is one of them.

U.S. stock futures were a little higher this morning following Friday's rally. Oil futures have been rising again due to the Russian-Georgian conflict and the dollar retracted from the five-month high set Friday. Global markets were mostly higher although China's hit a 19-month low.

Waste Management (NYSE: WMI) is expected to raise its unsolicited cash offer for rival Republic Services (NYSE: RSG) by nearly 10% to $6.73 billion, the Wall Street Journal reported.

Verizon Communications (NYSE: VZ) and two unions agreed on a new three-year contract Sunday, averting a possible strike of 65,000 workers. The new contract provides 10.5% wage increases and changes in retirement benefits.

Berkshire Hathaway (NYSE: BRK.A) reported an 8% decline in second-quarter profit after the market close Friday. The investment group attributed the decline to fewer insurance premiums and $1 billion in unrealized derivative losses.

Not many companies in the insurance business largely dodged the current credit crisis. No one should be surprise that Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) is on that list. The company's insurance underwriting operating division saw it business slow a bit, otherwise the company did remarkably well.

Berkshire's net income fell to $2.88 billion, or $1,859 per Class A share, from $3.12 billion, or $2,018, a year earlier. Revenue rose 10% to $30 billion. The numbers beat Wall Street estimates. Investment income actually rose 3% to $884 million, quite an accomplishment in a down market.

Investors sometimes forget how hard it must be to squeeze improving results out of a company like Berkshire. It operates businesses from furniture retail to jet leasing to Fruit of the Loom.

By any set of odds, Buffett should have some bad quarters, even one really bad quarter. That never seems to happen.

Douglas A. McIntyre is an editor at 247wallst.com.

Exxon Mobil Corp. (NYSE: XOM)'s record-setting quarterly profits last week prompted renewed calls for a windfall profits tax against the oil industry. The problem I have with these theory is that people usually do not explain what they mean by a "windfall."

"How does it differ from your everyday, run of the mill profit?" The Wall Street Journal noted in an editorial today. "Is it some absolute number, a matter of return on equity or sales -- or does it merely depend on who earns it?"

Also, is the government going to figure out how much Exxon deserved to earn and what gives the government the right to single out the oil companies for such treatment. Why not subject Google Inc. (NASDAQ: GOOG) or Warren Buffett's Berskshire Hathawy Inc. (NYSE: BRK.A) to a windfall profits tax too? They make lots of money, right?

Well, the reason why we don't penalize companies just because they make a lot of money is because that would be insane. As the Journal notes, it's hard to make the case that Exxon's profitability is excessive. In 2007, its profit margins were 10%, in-line with the industry average. The oil company's margins were worse than firms in the chemicals industry, pharmaceuticals, beverages and tobacco, the paper said.

Exxon Mobil is a pretty easy company to dislike. Its politics are reactionary, particularly on global warming. Its attitude toward alternative energy is skeptical. Wall Street already gave a thumbs down to its latest earnings report which is a far more effective punishment than a windfall profits tax.

Putting the squeeze on the oil industry may feel good, but it won't bring back $2 gas prices. Those days are gone forever.

Today the Dow Jones Industrial Average bounced back from yesterday's poor showing. It ended the trading day at 11,397.56, that's plus 266.48 (+2.39%) returning more than it had lost only 24 hours ago.

There are plenty of prognosticators explaining why this happened and so I am not going to join the crowd this afternoon with my own version. Leave it to say we are in a period of uncertainty where investors and traders alike are a bit jumpy. We did have a 5.4 magnitude earthquake today in Southern California, only fitting for this type of market.

In the meantime I have been wondering how to take advantage of the lousy situation in the financial sector of the market. How can I maximize my gains and control risk at the same time? I guess we are all trying to do this, but few will appreciate my contrarian, 'no guts no glory' approach.

I think you have to be buying banks and investment companies and I have decided that ten is the right number. Sir John Templeton (RIP) is the catalyst for this notion. I am already on record (Serious Money: More signs the market has bottomed) that this is the time to be selectively buying and 'my pal Warren' said as much at the Berkshire Hathaway (NYSE: BRK.A) annual meeting when he suggested the financials have seen the worst of the storm.

The SEC is trying to stop Wall Street players from spreading rumors that sink stocks, as I posted yesterday. The reason such rumors matter is because there are many companies that are unable to defend themselves from rumors. Bear Stearns comes to mind as an example. I think if someone tried to spread a rumor that Goldman Sachs Group (NYSE: GS) or Berkshire Hathaway Inc. (NYSE: BRK.A) were heading for bankruptcy, the rumor would not get foo far.

But if a company lacks such a strong reputation, its CEO needs to be prepared to respond effectively to such rumors. And I really don't think it should be difficult to mount an effective defense. In my mind, the CEO should be able to provide credible answers to two questions:

• Cash flow. How large are the company's short- and medium-term liabilities and how many times do the market value of its short- and medium-term assets cover these liabilities?
• Debt default. What are the company's key loan terms and what specific assurance can the company provide that it is in compliance with these terms?

We have posted numerous articles about the acquisition of Anheuser-Busch (NYSE: BUD) by InBev (NV) and it now looks like the deal has been done at a price of $70 per share. However, what made this deal work for InBev might have been that the dollar has fallen so far.

The exchange rate between the dollar and Euro gives InBev a 30% to 35% discount making the acquisition price seem like a great deal for BUD shareholders but an even better one for InBev shareholders. And if the the currency exchange rates shift back over time then all the shareholders win.

This means that Americans will be answering to the Dutch Belgians. If the dollar had gained against the Euro instead of becoming weaker is it possible that Anheuser-Busch (BUD) would have bought out InBev (NV)? If the dollar stays down or drifts lower as seems likely right now look for more M&A activity from abroad.

In the mean time, since 'my pal Warren', is the largest shareholder of BUD through Berkshire Hathaway (NYSE: BRK.A) and supports the deal, will he remain a shareholder of the new company? No doubt this increases the value of Berkshire, but does this set the stage for Buffett to enter the European market in a big way?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of BRK.B.

The credit crunch is not going away, and as a result, there has been a sharp fall-off in leveraged buyouts (LBOs). Basically, only relatively small LBOs -- between $1 billion to $2 billion -- are getting done.

But there is a bright spot: strategic acquisitions. If anything, we are seeing a variety of mega deals in this category. A survey from Dealogic shows that – as of June 25 – there were $597 billion in strategic M&A transactions, only 2% down from last year's total.

Some of the notable deals include: InBev's $49.9 billion play for Anheuser-Busch Cos. (NYSE: BUD), Mars' $23 billion deal for Wm. Wrigley Jr. Co. (NYSE: WWY) and Dow Chemical Co's (NYSE: DOW) $18.8 billion cash purchase of Rohm & Haas Co. (NYSE: ROH). The last two have involved financing from Warren Buffett's Berkshire Hathaway (NYSE: BRK.A).

Why the resilience with strategic deals? Well, there are several key reasons.

It must have been a deeply emotional board meeting for Anheuser-Busch Cos. (NYSE: BUD). In family control for more than 150 years, the company has become a quintessential American icon.

Despite all this, Anheuser's had no choice in selling out to InBev NV, a giant beer company based in Leuven, Belgium.

Simply put, the offer was too rich: $49.91 billion. After all, over the past few years, Anheuser was a laggard. What's more, the plunging dollar has made it easier for foreign-based buyers to make plays for U.S. companies. It seems that no company is immune.

The Anheuser-InBev merger combination -- which will be called Anheuser-Busch InBev -- will result in the world's largest beer company (the #2 will be SABMiller PLC). In all, revenues will amount to roughly $36 billion.

For InBev the deal carries lots of risk. The valuation for Anheuser comes close to 15X EBITDA (earnings before interest, taxes, depreciation and amortization). Furthermore, the deal involves a huge slug of debt. Then again, over the years, InBev has demonstrated savvy M&A skills, wielding a strong cost-cutting knife.

In the end, it's the shareholders who are cheering, with Warren Buffett being particularly joyful. His company, Berkshire Hathaway (NYSE: BRK.A), owns 5% of Anheuser.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

When it comes to a mega M&A deal that involves an old-line company and a founding family, Warren Buffett is on speed-dial. For example, his firm, Berkshire Hathaway (NYSE: BRK.A), provided $4.4 billion in financing for the Wrigley Co. (NYSE: WWY) buyout.

Now, Warren is plunking down some more cash on another big deal: Dow Chemical Co's (NYSE: DOW) $18.8 billion cash purchase of Rohm & Haas Co. (NYSE: ROH). In this case, the contribution comes to about $3 billion (in the form of a convertible preferred structure, which has a nice 8.5% coupon rate). As a result, Berkshire will become Dow's largest shareholder.

Yes, the US economy continues to be bleak and there is lots of fear. But, for long-term investors – such as Warren – this is an ideal time to pick up juicy opportunities.

In fact, this is evidence that the smart money sees lots of value from M&A deals – especially transformative ones. Then again, in order to compete on a global scale, there is a need for economies of scale.

For the most part, Dow focuses on petroleum-based chemicals. As for Rohm & Haas, it deals primarily with adhesives, personal care products, paints and so on. In other words, Dow is trying to find ways to diversify things.

Although, the deal for Rohm & Haas is no slam dunk. It's not easy to make such a transaction in a tough economic environment. Plus, Dow is paying a massive premium – thus setting a high bar for performance.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.