Okay, so maybe Shakespeare did not write this EXACT phrase…but if he had, CNBC would have been quoting him all afternoon Monday.

After suffering months and weeks of bone-chilling stock market selloffs, investors are desperate for sunshine. They are desperate for a new reality, even if that reality be slightly unreal and delusional.

Investors are so exhausted that they are prepared to believe that teams of bureaucrats from around the world can repair what bands of unfettered capitalists destroyed. They are prepared to believe that insanely leveraged economies can deleverage without tears. And they are willing to suspend their disbelief that the worst has passed, in order to embrace the belief that yesterday’s stupendous rally was, “The Bottom.”

Your editors are not entirely persuaded that the winter of our discontent has passed. In fact, it still feels pretty darn cold out there in the financial markets. The credit markets, for example, are still frozen shut.

So forward-looking investors must ask themselves: Is it time to go ice-fishing?

The answer depends greatly upon one’s capacity to brave the elements. Very few investors anticipated any sort of winter at all, much less the severe chill that is paralyzing the global financial markets. Therefore, very few investors prepared or provisioned adequately.

We all know that we can’t simply huddle inside our igloos forever. And we also know that the schools of value-laden stocks that are circulating in the stock market’s murky depths are as plentiful as they have ever been. So we realize that we must get out there eventually and drop a line into the water.

Unfortunately, most of us just lost our shirts — if not also our jackets, shoes, pants and underwear — during the last few weeks. Therefore, even if we believe we should be out in the bone-chilling financial markets trying to hook some bargains, we have very little capital left to risk.

So the next question becomes: What to fish? Many of today’s depressed stocks should provide an appetizing return over the next three to five years. But since economic conditions could become even more dire than most of us now imagine, why not snag the stocks that pay very rich and relatively secure dividends?

Dividends, after all, offer cash in your pocket even during turbulent times in the marketplace. And if you reinvest those payments back into stock, chances are you’ll beat the market considerably.

A study by Wharton Professor Dr. Jeremy Siegel shows that 97% of stock market returns can be traced to reinvested dividends. If that’s not opportunity knocking, I don’t know what is…

Regards,
Eric Fry

October 15, 2008

P.S.: You would have received your first big-time dividend today, if you had checked out our colleague Chris Mayer’s “Paycheck Portfolio.” No need to worry though. Companies in this special portfolio are going to write 75 checks this year, even as the market has been going to hell. There’s no sign of them slowing down any time soon.

In the coming weeks, we’ll be talking much more about dividends and income opportunities that are both lucrative and safe…especially in this market. Feel free to write in and let us know what you think.

Solution to the Economic Crisis was originally featured in the Penny Sleuth.