IT WAS LIKE WATCHING KING KONG vs. GODZILLA. 

The shrill shriek of one uptight, insecure, and angry creature bellowing madly at another one. 

No, I'm not talking about the Democratic primary between Leiberman and whatever-that-dude’s-name is (let go Joe, let go...). 

Nor am I talking about the very public riff Donald Trump and Martha Stewart had earlier this year about the failure of the "Apprentice 2" (who could have seen that one coming?). 

I'm talking about a debate I watched recently on public access cable at around 3:00 in the morning as I recovered from knee surgery. 

I know what you're thinking: "They have public access cable in Delray Beach, Florida?" 

Well believe it or not, they do … 

... and sometimes, just sometimes, you can see two overweight, poorly dressed, Man-Bear-Pig-Like creatures taking out all of their repressed rage right from the comfort of your own home! 

But it wasn't just the spectacle of polyester mixed with under-arm sweat that first caught my attention. 

It was a word I thought I heard while flipping past the channel. 

A word so foul sound that only a right-brained ECONOMIST could have dreamed it up. 

A word so perverse that U.S. investors have spent the last 25 years trying to forget it.  

I happen to be talking about a nasty term called "stagflation." 

That's right: Stagnant Economic Growth Inflation. 

You remember that word – last uttered with frequency in the late 1970's – don’t you? 

Well for any of you who don't, let's take a trip down memory lane … 

THE YEAR IS 1978.  

Michael Jackson is still black. You're still considered cool. 

But manufacturers aren't manufacturing, and unemployment is out of control.   

Oil prices are so high – and a gas shortage so severe – that there are lines around the block for gas stations in the middle of a hot summer.  

But that's not all.  

The real problem is inflation.  

And, in an effort to fight it, Paul Volcker – the Chairman of the Federal Reserve – has raised interest rates to levels not seen since the Great Depression. 

Yup, those were some dark days for U.S. equity investors, among other Americans. 

And it’s whispers of that fear that I'm hearing most often these days from friends of mine who are considered "smart money." 

How could the Wall Street "smart money" go FROM thinking about the "Goldilocks" economy 6 weeks ago TO choking on nightmares of Paul Volcker’s cigar smoke so quickly? 

In short, it was the "Killer 7." 

Confused yet?  Let me explain:  

Employment, Retail sales, Manufacturing production and Housing have all been weaker than expected recently (except that small positive note last week on retail). 

While Inflation, twin deficits, and a dollar decline were larger than expected. 

So what's an equity investor to do?  

Some argue that it's time to get wildly bullish right now. 

Those folks need professional help. 

As Chris Rowe pointed out last week, every mid-term election year since 1914 has brought a market drop before the election, and a rise thereafter. 

Why fight almost a century of history to buy stocks that aren't that cheap in the first place? 

My advice is to find great companies whose stocks have ALREADY dropped into your buying range due to some short-term problem.  

In this month’s issue of Fallen Angel Stocks, we found a blue chip company that fits this description to a tee – and is selling for much less than it’s worth. 

But what makes this company so special is not that it's selling for half of what it’s worth. 

What makes it so special is that its problems can be directly traced back to a CEO who was, for lack of a better word, a moron. 

Seeing that he was destroying the company, his enemies released dirt alleging that he’d forged his college credentials. (Supposedly it was true – the guy resigned soon after.) 

Boardroom politics aside (who would have made college education an issue if the guy was hittin’ them out of the park?), we found a silver lining in the story: 

A highly respected CEO who just steered a successful turnaround of another large retailer just signed up for the task of coming in and fixing what was broken. 

And after making $8 BILLION for previous shareholders, this guy decided to get paid himself – mostly in stock options – when he came on board. 

What do you make of this kind of confidence on the part of the new CEO? 

In short, we might just have the kind of buying opportunity here that you only get once in a long while. 

So, instead of wasting the rest of the hazy days of summer trying to decipher how hard your stocks will take it on the chin if the market does fall before the elections … 

... Grab a glass of good wine, lock the emotional vampires out of the room, and cozy up to the latest issue of Fallen Angel Stocks!