This week I am in South Africa. At the moment I am literally flying from Johannesburg to Durban in a single-engine Pilates PC 12, a very upscale Swiss-manufactured plane. I am told pilots will know and appreciate the plane. It is supposedly the safest plane in the world, which is somewhat comforting as we bounce through a few storm clouds (and thunderstorms later tonight of the way to Cape Town!). My business partners and hosts, Dr. Prieur du Plessis and Paul Stewart of Plexus Asset Management, have kept me busy, but it has been fun.

This week's letter is the text of the keynote speech I gave last night at the Raging Bull awards in Johannesburg. There are a number of awards given to the various mutual funds (called here a unit trust or a collective investment scheme) that had the best performance in their respective categories over the last 3-5 years. The winning funds had some very impressive performance indeed. It was a black tie dinner with about 400 attendees. It was one of the more elegant events I have attended in my life.

Before we get to the text of the speech, a few thoughts on my impressions of South Africa so far. It has been about 12 years since I have been here. My last visit I drove from Jo'burg to the administrative capital at Pretoria, a distance of about 30 miles. It was basically farm land between the cities.

There is an arcane debate going on in economic circles. How fast can the economy grow without inflation becoming a problem? The answer may be, not as fast as we thought. And the answer matters because the people who have their fingers on the interest-rate trigger take this arcane stuff seriously. How you answer the question also has implications for the unemployment rate. Yes, there are people who worry about it getting too low. Plus, we look at the Dow. The Dow may be telling us more about how indexes are constructed than about how the economy and the market are really doing. All that, some thoughts on the housing data, and more as we ponder the question, "Is it really different this time?"

But first, one of the really great investment conferences every year is the annual New Orleans Investment Conference. This year it is November 15-19. Originally started by the late Jim Blanchard, the conference has a strong gold contingent, but has expanded to cover a wide range of themes. Last year, the conference had to be rescheduled because of Katrina, but this year it is back and looks to be better than ever.

In addition to yours truly, they have lined up Steve Forbes, Jim Rogers, Marc Faber, Dennis Gartman, and Newt Gingrich, plus scores of other well-known speakers, workshops, and private sessions. If you register before November I, you can save $200 on the full price and half off for a friend or spouse.

I got home late last night from two weeks with the kids in Europe, and jet lag is kicking in. Since I should not be allowed to make any investment observations in this state, I am going to do something for which I constantly get requests and that I have wanted to do for quite some time. This week I give you my list of recommended books along with a little commentary on them, starting with a few new ones. Let's jump right in.

This week I want to briefly look at some comments by Stephen Roach and Rob Arnott, two of my favorite analysts. Then we quickly segue into Part One of a series showing the relationship between stock market returns, P/E ratios, inflation/deflation and the economy. This is some of the more practical and significant research I have written about in the last few years, and I think you will find it very helpful in developing your own investment strategy.

Exactly what use is past performance? How can you spot a trend before it starts, and determine when it will stop? And when will the next big bear market rally start? This week we examine why so many investors fail, and why a few succeed over and over again. While I am sure that none of my regular readers make these mistakes, this will be a useful column to send to your friends who have not been as successful as you. Oh, yes, and I tell you how to know when the next big rally starts. Let's keep that detail to ourselves. No use tipping your friends on this one.

My theme for the last few weeks has been that we are in the Muddle Through Economy -not much downside but not much upside. The data this week reinforces my point. Today we will look at the evidence that continues to mount.

Have we seen the bottom? Is it onward and upward? As I start this e-letter, the S&P and DOW are trying to top their recent highs. Will the S&P go through the 1250 resistance level? Is my short trade in jeopardy? Is it time to become a bull?

I will become bullish once again, but not yet, fellow traveler. While I cannot see around the Curve In The Road, I can read the warning signs. They keep telling us to watch out for bear traps.