Yesterday was a tough day in the markets, with the Dow falling 199 points. But, if you follow some of the legends of finance – such as Carl Icahn, T. Boone Pickens and The Blackstone Group's (NYSE: BX) Steven Schwarzman – you will notice that they are getting aggressive.

Keep in mind that these guys have been through multiple market cycles. And, if history is any worthy benchmark, it's during times of instability where the big money is made.

Pickens is focusing on the energy industry. He sees major demand/supply imbalances and is buying various stocks. He is also interested in natural gas and alternative fuels.

As for Icahn, he's doing what he does best – shareholder activism. He senses when companies are vulnerable and seems to relish an attack on corporate managements and boards. Of course, he's gearing up for a fight with Yahoo! (Nasdaq: YHOO). Interestingly enough, he persuaded Pickens to buy 10 million shares.

And, with Schwarzman, he's buying up the bank debt of companies that went private. Because Blackstone sees many deals, it has an extensive database of opportunities.

In other words, the legends of finance are confident in the long-term. They are making some big bets -- based on lots of experience and due diligence -- and not listening to the short-term noise. All in all, these are some valuable lessons for investors.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

MAJOR PAPERS:

• Barnes & Noble Inc (NYSE: BKS) is considering a bid for rival bookseller Borders Group Inc (NYSE: BGP), the Wall Street Journal reported, a move which would allow Barnes & Noble to improve profits and reduce costs. Antitrust issues could prevent a deal.
• The Wall Street Journal also reported that Carl Icahn's effort to remove Yahoo! Inc's (NASDAQ: YHOO) board has picked up new supporters, including T. Boone Pickens, who acquired a 0.75% stake. Some Yahoo shareholders believe it is still too early to predict whether Icahn will be able to carry July 3's shareholder vote.
• A Financial Times investigation discovered that Moody's Corporation (NYSE: MCO) incorrectly awarded top ratings to billions of dollars to debt products due to an error in its computer models. Moody's said it is in the process of "conducting a thorough review" of the rating of the constant proportion debt obligations, which should have been up to four notches lower.

• According to the people briefed on the matter, the New York Times reported that the buyout of Penn National Gaming Inc (NASDAQ: PENN) by Fortress Investment Group (FIG) and Centerbridge Parters may involve revised terms. The sources said the negotiations may "delay or even imperil" the deal.

USA Today reports that oil billionaire T. Boone Pickens is placing a $2 billion bet on wind power. Pickens' Mesa Power plans to build the Pampa Wind Project in the Texas Panhandle. It will eventually cover 400,000 acres and generate enough power for more than 1.3 million homes -- making it the largest wind farm in the world.

And Pickens is helping General Electric Company (NYSE: GE) in the bargain. That's because he's buying GE turbine technology. GE is expected to deliver 667, 1.5-megawatt wind turbines in 2010 and 2011. Jeffrey Immelt, GE Chairman and CEO said, "As America's demand for energy escalates, it is clear that wind can and will play a bigger part in meeting that need. We're excited to partner with an energy visionary like T. Boone Pickens to bring our wind technology to the marketplace."

With oil hitting $127 a barrel, I hope this project is the first of many. It will take many different sources of alternative energy to reduce U.S. demand for black gold. Wind power is certainly a good alternative. And if Pickens and GE get richer in the process, that's fine by me.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns GE shares.

• DJIA 12,532.60 (-16.04; -0.13%)
• S&P500 1,352.99 (+3.11; +0.23%)
• NASDAQ 2,341.05 (+14.30; +0.61%)
• 10YR-TBond 3.492% (-0.03)

It's been a big day for Chesapeake Energy Corp. (NYSE: CHK). The company said that it has made a big gas discovery in Shreveport, Louisiana, which could have material impact on its output. The reserves could amount to 20 trillion cubic feet, and Chesapeake is pumping up its capital expenditures by $275 million this year and $675 million in 2009.

No doubt, the expectation is that there will be some serious needs for energy, despite the recent slowdown in the US economy. It certainly helps that natural gas prices have been particularly strong. And, for the most part, natural gas is critical for basic needs, such as electricity and heating. Oh, and it tends to be cleaner.

On CNBC today, energy tycoon T. Boone Pickens said that he owns Chesapeake's stock (and yes, he had some nice things to say about the company). He also thinks that oil will remain above $100 per barrel for the second half of the year.

In today's trading, Chesapeake's stock price is up 3% to $46.45.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

The World Bank entered the increasingly-divided debate on where oil prices are headed Wednesday by announcing in its Global Economic Prospects 2008 report that oil prices will fall gradually through 2009 to about $75, then fall toward $50 per barrel, in the longer-term.

"In the longer term, the oil market balance is expected to loosen and prices are projected to fall toward $50 per barrel," the World Bank wrote in its report. Oil closed Wednesday down 74 cents to $95.59.

The bank said that because OPEC has limited spare capacity and is holding down production, oil prices will likely remain quite elevated and volatile. However, high prices and increasing environmental concerns should continue to moderate growth in demand.

The Washington, D.C.-based international bank said it sees finely balanced markets in 2008-2009, then rising upstream investment in oil producing countries (OPEC and non-OPEC) should result in new supplies that exceed the growth in demand.

Few people know the energy industry as well as T. Boone Pickens and, if you like to follow 13-D filings in search of investment ideas, you may want to take a look at InterOil (AMEX: IOC) because Pickens has increased his stake in the company to 9.9%.

It's interesting to see the once-feared raider involved in InterOil because it looks like a very speculative investment: InterOil is working on a natural gas project in Papua New Guinea, but currently has no proven reserves and a lot of debt. All this for a market cap of just south of $1 billion.

But if you're going to speculate on an energy stock, you could probably do a lot worse than to follow Pickens into InterOil. No one knows exactly what his intentions are -- he won't talk and neither will the company -- but the presence of such a prominent oilman should help the company's future fundraising efforts. The shares have been extremely volatile of late, but the upside of a super-investor may not be priced in yet.

I would continue to watch this one from the sidelines for now.

Clean Energy Fuels (NASDAQ: CLNE) accomplished a mildly solid showing with their IPO on Friday, although the project was scaled back from previous expectations. Well-known oil man T. Boone Pickens, principle shareholder of the company, had upped his expectations in March 2007 from $287.5 million initially to $354 million, as reported by Orange County Business Journal. The expected IPO share price had been in the $13 to $17 range on an anticipated volume of 20 million shares. On Friday, however, expectations were lowered and 10 million shares were sold at $12 and the shares rose in value marginally.

It's been speculated that economic conditions were mostly to blame for both the revised expectations as well as the tepid IPO performance. Clean Energy Fuels is an established company with at least some profitable history. The IPO is expected to fund growth in manufacturing capacity and product outlets, as well as to underwrite growth of the company's customer base. Clean Energy provides natural gas for municipal service trucks, buses, and other fleet vehicles. In 2006, Clean Energy had sales of $91 million but showed an operating loss of nearly $9 million. Currently the company has an estimated market value of about $600 million, and Mr. Pickens owns about 73% of the company.

ConocoPhilips (NYSE:COP) shares tumbled today after the third-largest U.S. oil company said fourth-quarter production would be below forecasts. Higher output in Alaska and the U.K. wasn't able to offset declines in the Timor Sea, conrtinental U.S. and Libya, Reuters said. The company's shares last traded at $66.49, down $1.70 or 2.49 percent.

Exxon Mobil (NYSE:XOM) and Chevron Corp (NYSE:CVX) also fell as oil prices continued to drop They have now hit $56 a barrel, according to the Associated Press. Does that mean cheaper gasoline prices will follow? Texas oilman T. Boone Pickens for one expects oil to average $70 this year. I am not sure they will hit those levels, but I think the days of really cheap oil are over.

Still, as Bloomberg News points out. the unbelievably mild winter that we've had this year is affecting the market. Prices had their biggest one day drop since December 2004

``We're getting follow-through from yesterday because the picture hasn't changed,'' said John Kilduff, vice president of risk management at Fimat USA, told Bloomberg. ``The temperature forecasts keep going up, which, combined with a relatively quiet geopolitical picture, is clobbering both crude and heating oil.''

Expectations that world oil supplies will soon peak and then sharply decline are incorrect, according to Cambridge Energy Research Associates. The research firm found that the remaining global oil resource base is 3.74 trillion barrels, three times as large as the people who believe supplies have peaked.