CNP: Where’s the best place to invest $100,000?

S.R.: Almost anywhere, except in buying a house you don’t need. I know everyone says home prices always go up. But even in the best of times, a home is typically not the best-performing investment. At this moment, all the evidence suggests home prices still have at least a bit further to fall.

U.S. equities are a good long-term bet, as long as you don’t need the money soon—in the next couple of years. Stocks have proved to be the best overall investments, almost regardless of which periods of time you choose to measure. But once you decide to invest in equities, be careful. Trying to pick your own stocks is like trying to do your own appendectomy.

CNP: With our economy struggling, are foreign stocks the way to go?

S.R.: I think most people should stick with the U.S.  This is still an exciting, resilient, productive economy. Buying foreign stocks basically means becoming a foreign-exchange speculator. That’s not what average investors should be doing.

CNP: Almost everyone seems to be offering investment advice. Who can I believe?

S.R.: First off, Jim Cramer should be shot—not literally, of course. Every­where you turn, there are endless reams of personal-investing advice. It all does people a disservice. It’s kidding an investor into believing he or she can beat the odds. Even if you do hear a useful idea, you go off and buy something and then you don’t know what to do next. Nobody ever tells you when it’s time to sell or that the world has changed and your investment no longer works.

CNP: Are we closer to the beginning or the end of this bad stretch for the economy?

S.R.: We’re smack in the middle of the downturn, just about halfway through. I think that when the dust settles and economists do a post­mortem, they’ll conclude that the recession began in the middle of the first quarter of 2008 and—like the last two recessions—ended eight months later. And there’s a chance we won’t have a recession at all.

My own view has been consistently that this is not going to be the end of the world as we know it, that we are going into a cyclical recession. I don’t think this is 1974, which I certainly remember well. Then we had stagflation, a combination of slow growth and high inflation. While it’s always important to worry about inflation, it’s hard to see it as an overarching threat.

Periodically during this recent down­turn, it has felt like going over the first bit of a roller coaster, where you plunge down. Even as your mind’s telling you that you’re not going to go off the tracks, every other part of your body is scared to death. That’s a pretty terrifying feeling. But the probabilities are heavily weighted toward the financial system’s correcting itself.

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