Its sights set on the United States and Asia, South Korea's $30 billion sovereign wealth fund is hunting for equities. Korea Investment Corp. (KIC) doesn't see bonds outperforming stocks over the long term, which is what has prompted the move.

Once the reallocation is executed, equities will account for half of KIC's "traditional" investments. Today, it stands at 40%. High quality equities and fixed income securities comprise 90% of KIC's portfolio, with the rest, one would gather, consisting of "non-traditional" investments.

Bill Gross is a big deal in bonds -- with $747 billion under management in his PIMCO. Gross emailed me yesterday because he was a bit put off by some of my recent media comments about him. I responded to him by asking him some questions about PIMCO and the general market. He thinks that equities are history and people should buy bonds instead.

Gross is obviously talking his book but in my interview with him, he made a very interesting point. He suggested that since bonds and preferred stock are senior to common stocks in the liquidation hierarchy of a company, in a slow growth environment, there is no upside to stocks, only downside.

Now that the Dow has fallen 10% from its October 2007 peak of 14,164 to 12,743 -- i.e. now that it officially qualifies as a correction, it's a good time to summarize the investment landscape, fundamental and technically.

Although numerous fundamentals (high energy prices, subprime mortgage defaults and subprime-asset losses, housing sector slump, slowing U.S. consumer spending) suggest U.S. economic growth will slow up ahead, and hence that more selling is ahead for the Dow, that, in fact, may not be the case.

If limited to roughly 10%, the Dow's decline constitutes solely a correction. Keep in mind also that the Dow is a lead indicator that always points to economic conditions 6-9 months ahead. Hence, investors, if they believe that measures being taken are addressing important concerns, could conclude that economic conditions will improve and hence send the Dow rising very soon.

In case you weren't sure what certain Street terms mean, here's a short guide - from a Permabull's perspective, of course.

Analysts. Highly paid cheerleaders who figure out ways to make stocks appear cheap

Bad news. Events that cause the Federal Reserve to cut interest rates so that share prices go up

Bears. Sad, lonely people who don't appreciate why equity prices invariably move higher

Brokers. Specially-trained relationship managers who convert mere mortals into super-bulls

Bulls. Well-bred equity investors

Bond market. The place where stock market bears are sent out to pasture for their wayward views

Cash. Realized gains that equity investors spend on fancy vacations and assorted luxury items

Dividends. A positive influence on stock prices

Economy. An irrelevant side show to what happens in the equity market

Fear. An emotion that bulls experience when they are not 100% invested

Federal Reserve Board. A group of public officials who do their best to ensure that bulls are happy

Fundamentals. Anything that can help explain why stock prices rally

Greed. The only emotion that matters when it comes to playing the stock market

Hedge funds. Aggressive investors who use lots of leverage to ensure that stock prices eventually go up

Interest rates. A factor that occasionally serves as an explanation for why stocks rally

Leverage. The fail-safe strategy of using borrowed money to boost returns as share prices rise

Losses. The net result of selling short and listening to bond traders

Mutual funds. Investment vehicles that enable bulls to remain fully invested in the equity market at all times

Short-sellers. Dour individuals who scramble to cover bad bets as stock prices rally

Strategists. Highly paid cheerleaders who figure out ways to make stocks appear cheap

Wall Street. The place where bulls congregate and fawn over one another

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle: An Insider's Guide to Successful Investing in a Changing World.

Stocks To Sell is an occasional column analyzing market trends and highlighting equities investors might want to avoid for now.

Stocks often get hammered after reporting weak earnings. But often the worst carnage comes during the weeks leading up to earnings season -- the period of time we're in now. That's when companies get their first inklings that they may not meet Wall Street targets and have no choice but to go public with that information. Inevitably, the stock gets slammed on the Street's reaction to such negative surprises.

Warnings often hit whole sectors. It may sound lame (and often is) when companies blame their weakness on external events like the weather or economic conditions. But such excuses can also be quite legitimate. The following are some trends that could (or already have) trigger earnings warnings in certain sectors -- and some stocks you might need to worry about:

Dining slump: On June 21, Cheesecake Factory Inc (NASDAQ: CAKE) warned that higher costs and and industry softness would mean its second quarter growth would not be as high as forecast. Analysts downgraded the shares and the stock fell 7% that day to $24.85. Analysts think the company is well-run, but say higher gas prices have hurt restaurants and higher food costs, including dairy costs, have hurt profit margins. Starbucks Corp. (NASDAQ: SBUX), too, faces higher costs and continues to slide, especially after the CFO commented recently that it would be hard for the company to meet its 2007 earnings targets.

Stock and bond market volatility has picked up the past few weeks as the yield on the ten-year bond increased from 4.6% to 5.14%, a big increase in what has been a mundane long-end of the curve for quite some time.

Pretty much following the bursting of the tech-telecom bubble and 9/11, the bond market has been stuck in a very tight trading range. Investors developed a Pavlovian response running into bonds on any bad financial news or events surrounding oil or terrorism. However, it appears that this might be about to change. The 10-year bond is oversold and due for a considerable rally, but after a bond market rally, look for a behavioral shift to equities to begin.

The returns for equities will be too promising to pass up and greed will win out over fear. Do not read too much into the recent selloff in bonds. Too much of the asset-allocation pie was directed into bonds, it is time for it to shift back into equities.

Analysis provided by oe Lazzaro of Theflyonthewall.com:

Phelps Dodge (NYSE: PD) has agreed to be acquired by Freeport-McMoRan Copper & Gold (NYSE: FCX) in a cash and stock deal that points to continued overall strength in the U.S.'s equity markets.

Phelps Dodge shareholders will receive $88 in cash and 0.67 shares of Freeport, an offer that translates to a roughly $126.46 per PD share.

Understandably, Phelps Dodge's share soared Monday on the news, up $26.60 to $121.61. Freeport's declined 96c to $56.45.

The Freeport / Phelps deal, along with Blackstone Group's $36B-including-debt offer for Equity Office Properties (EOP) and the Bank of America's $3.3B offer to buy U.S. Trust on Monday, are events that point to overall continued strength or "bullishness" in the U.S. equity markets. The normal state of the free enterprise system is growth, accompanied by periods of mergers and acquisitions, as executives look for ways to grow market share, increase efficiency, and deploy capital more productively. And since growth and its companion mergers almost always signals that higher profits are up ahead, Wall Street is generally gladdened by the sight of merger and acquisition activity.

Further, the Freeport Phelps Dodge merger makes a great deal of sense from an operational standpoint. Freeport will be able to diversify is gold production base while also adding Phelps' substantial sector position in copper: PD is the world's third largest copper miner.

Investment Analysis: How can one profit from the PD / FCX deal? Keep in mind that substantial risk remains, because while Freeport and Phelps have tentatively agreed to merge, the deal is not complete until it has been finalized. I.E., the deal could be called off before the closing stage.

Hence, the best way for the typical investor to benefit from Freeport / Phelps is to wait for the deal to be finalized, then buy shares of Freeport in stages, on a weekly basis. For example, if you're buying 200 shares, buy 50 shares per week; for 400 shares, 100 shares per week. This tactic will enable you to benefit from pullbacks in FCX, should they occur.

Also remember that a mining stock's performance rises and falls with commodity demand, which makes Freeport / Phelps' shares suitable only for investors who can tolerate moderate risk. It's not a stock for conservative investors. Currently, there is strong demand for copper and solid demand for gold, which bodes well for a merged FCX / PD, for the next 2-3 years.