In this series, we take a look at the 25 stocks in the S&P 500 Index (SPX) that have turned in the worst performance during the past decade -- what went wrong, and what happens next.

I'll give you just one hint at the nature of the problems MGIC Investment Corp. (NYSE: MTG) is facing: MGIC stands for Mortgage Guaranty Insurance Corporation. In other words, things were going just fine for the Milwaukee-based firm until about, oh, mid-2007, when the slime known as subprime hit the proverbial fan.

What went wrong? At number 4 on our list of SPX stragglers, MTG lost 89% of its value from June 30, 1998 through June 30, 2008. From its July 2004 peak at $78.95, the stock is down 93%, and is now trading near all-time low territory.

In the first quarter of 2007, it was business as usual for MTG. The company announced plans to acquire its sector peer, Radian Group (NYSE: RDN), for $4.9 billion in the stock. The merger would have created a massive mortgage giant with about $15 billion in assets. Unfortunately, the deal was never consummated.

MOST NOTEWORTHY: Ford, Imperial Tobacco and Schlumberger were today's noteworthy upgrades:

• Soleil upgraded Ford Motor Company (NYSE: F) to Buy from Sell as they expect improved sentiment towards shares given new product launches, cost cutting efforts, North American capacity reductions, and better than expected performance on the cash side.
• Imperial Tobacco Group Plc (NYSE: ITY) was raised to Buy from Hold at Citigroup to reflect FX benefits and pricing in continental Europe.
• Morgan Stanley upgraded shares of Schlumberger Limited (NYSE: SLB) to Overweight from Equal Weight following the company's Q1 results, as they expect consensus estimates to move higher over the coming quarters.

OTHER UPGRADES:

• B. Riley raised Wilmington Trust Corporation (NYSE: WL) to Buy from Neutral.
• Morgan Keegan upgraded Healthcare Services Group Inc (NASDAQ: HCSG) to Outperform from Market Perform.
• Bear upgraded MGIC Investment Corporation (NYSE: MTG) to Outperform from Peer Perform.

Barclays analysts say banks that obtained $72 billion in funding to replenish capital depleted by subprime-related losses may need another $143 billion in capital infusions if credit rating agencies downgrade bond insurers several levels, Bloomberg News reported Friday.

Barclays analyst Paul Fenner-Leitao Banks wrote in a research report published Friday that banks will need at least $22 billion if bonds covered by insurers MBIA (NYSE: MBI) and Ambac (NYSE: ABK) are cut one level from the current AAA and six times that if they are cut four levels, Bloomberg said. The capital amount is based on Barclays' estimates that the banks hold as much as 75% of the $820 billion of the structured securities guaranteed by bond insurers.

Meanwhile, the markets awaited word on New York Insurance Superintendent Eric Dinallo's meeting with banks on a bail-out package for bond insurers. Shares of some key bond insurers fell after Dinallo issued a statement that the negotiations were complicated and would take time, leading some in the market to doubt the New York agency's ability to marshal private resources for the initiative.

MBIA fell 79 cents to $13.61, Ambac gained 15 cents to $11.48, PMI Group (NYSE: PMI) rose 17 cents to $8.97, and MGIC Investment (NYSE: MTG) declined 6 cents to $16.68.

Key regulators at the New York State Insurance Department met Wednesday with U.S. banks to discuss raising new capital for bond insurers, a department spokesman said, Bloomberg News reported late Wednesday afternoon.

Talks in New York with unnamed banks are part of New York Insurance Superintendent Eric Dinallo's effort to stabilize the bond guarantors and bolster the market's financial condition, New York State Insurance Department spokesman Andrew Mais told Bloomberg News.

Market rallies on insurer meeting

Word of the meeting sparked a remarkable 600-point reversal rally on Wall Street, with the Dow closing the day up 298.98 points to 12270.17. The Dow had been down more than 300 points earlier in the day. The broader markets also rallied.

What a fantastic time to own oil, gold, or any currency other than the dollar! And what a wonderful world it must be for foreclosure lawyers! How can you profit? Buy non-dollar currencies, lock in your heating oil price, and consider shorting mortgage insurers.

The statistics are mind-numbingly awful. The price of oil hit a record $96 a barrel, up 300% from $24 in January 2001. Gold is near a record high at $800, the dollar is at record lows -- for instance it takes $2.08 to buy a British pound. Housing, which has been tumbling from its peak in August 2006, is hurting too -- with foreclosures up 100% in the last year. And the mortgage meltdown has led to big layoffs -- my firm counts 70,087 finance layoffs by 42 companies so far this year.

There are three ways you can profit from this trend. First, you can buy currencies -- like the pound and the Euro -- which are getting stronger as the dollar weakens. Second, if you heat your house with oil, you can consider locking in a fixed price -- because oil is clearly going to keep going up.

TheStreet.com's Jim Cramer says the price of no more rate cuts from the Fed would be foreclosures. Lots of them.

Have you noticed that MBIA (NYSE: MBI) (Cramer's Take) and Ambac Financial (NYSE: ABK) (Cramer's Take) are just being crushed today?

More important, has the Fed noticed?

Lots of people have asked me where I came up with the $500 billion loss number I've been mentioning. Here's the deal: A large group of people, 50% of the 14 million homebuyers, are going to default on their "2 and 28" adjusted-rate mortgages now that they are being reset. Many of these people paid for the 2% with home equity loans that they can't pay back.

Think of those millions of no-money-down ads. Those worked! These people can't pay now that the resets are in the house. Others, allegedly AAA borrowers, will find themselves defaulting, and the insurance won't be paid. That's horrible, but that's what the stocks are saying.

MOST NOTEWORTHY: Applied Materials (AMAT) and Marvel Entertainment (MVL) were the most notable companies initiated today:

• Citing an unattractive valuation, Nollenberger initiated Applied Materials (NASDAQ: AMAT) with a Neutral rating.

• Susquehanna initiated Marvel Entertainment (NYSE: MVL) with a Positive rating, expecting strong earnings momentum for the foreseeable future driven by the success of licensed properties and the release of feature films.

OTHER INITIATIONS:

• Rochdale Research initiated shares of Callaway Golf (NYSE: ELY) with a Neutral rating and $12.50 target, citing valuation

• Prudential initiated MGIC Investment (NYSE: MTG) with an Underweight rating and $65 target; as they prefer business models that are less reliant on the U.S. mortgage insurance, the firm sees an unfavorable risk/reward.

• Merriman initiated TheStreet.com Inc (NASDAQ: TSCM) with a Buy rating. Merriman said TheStreet.com is transitioning to a Media Business model leveraging unique content assets and high organic user traffic. The firm likes the company's strategy to increase its mass market appeal towards the retail and professional investors.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).