I think the Madoff news on Friday proves that when it comes to market investing, anyone who offers “iron clad guarantees,” as Madoff did to his investors, should be avoided like the plague.

Furthermore, the Madoff news underscores the fact that individual investors can take actionable charge of their own personal investing and wealth by avoiding the scams and other nonsense that some might offer.

One of the best ways to beat back the bear is to place short-term catalyst-driven trades ahead of a company-specific event.

Each week, I try to present these short-term trades in my weekly Rocket Stocks portfolio.

Here is a brief wrap up of how our two tradable ideas faired among last week’s havoc.

Long Freeport-McMoRan (FCX): Freeport ended up the week a solid 25% as copper prices firmed up and oil and gold rallied.

Investors should note that it only costs Freeport around 80 cents per pound of copper (spot prices are $1.70 or so), and $250 per ounce of gold (spot prices are $800 or so) to mine these out of the ground. In the short term, a pullback is warranted, but if this stock revisits the $17, $18, or $19 range again, you want to buy.

Long Nvidia (NVDA): Ended up the week a solid 18% as the overall Nasdaq moved higher. Additionally, there were some positive notes regarding Nvidia’s chip sales to Apple (AAPL). The company still has zero debt and is completely cash-flow positive.

Onto this week’s Rocket Stocks portfolio.

Stewart Enterprises (STEI) for a long earnings trade: There are more than 35 million Americans over the age of 65, the most there’s ever been. By 2030, there will be more than 70 million Americans over the age of 65. Sadly, the need for funeral services will be greater than ever. Stewart, which owns more than 221 funeral homes, did two $25 million buybacks in the mid-$8 range, helpign to reduce its current shares outstanding, which should help this quarter’s earnings.

At $2.83, trading with a forward P/E of 6.28, Stewart is likely to “pop” after its earnings.

3Com (COMS) for a long earnings trade: I’ve written about 3Com as an earnings trade for the past two quarters, and both calls were winners. The stock moved 20% higher intraday when it last reported earnings.

Last year, private-equity firm Bain Capital and Chinese-based Huawei Technologies proposed a $2.2 billion deal, which was rejected by the U.S government over concerns that sensitive military technology could be compromised by the Chinese government. The market has totally forgotten that on Aug. 5, 3Com raised its forecast for the fiscal first quarter to $335 million to $340 million, compared with the previous estimate of $325 million to $330 million. The company also expects its non-GAAP earnings per share to be in the range of 6 cents to 8 cents, compared with the prior view of 3 cents to 5 cents.

3Com seems like a good risk/reward trade ahead of the quarter. Last quarter, quarterly net profit was $79.8 million, or 20 cents a share, compared with a net loss of $18.7 million, or 5 cents a share, in the year-ago quarter.

CEO Bob Mao said: "In today's tight economy, we are seeing clear signs of a fly to value, as customers look to get more for their networking dollars."

Furthermore, 3Com management issued a $100 million dollar buyback last quarter.

Titan Machinery (TITN) for a short earnings trade: I’d actually short shares of Titan Machinery ahead of their quarter on Monday night.

With the recent weakness in Cummins (CMI) and Deere (DE) guidance, Titan, which is a full-service agricultural and construction equipment company, will not be immune to the sectors mammoth slowdown. Furthermore, the company trades with an EV/EBITDA of 10.1 and forward P/E of 13.1, both of which can be classified as extreme in terms of valuation.

For the second quarter of 2008, Titan only reported profit margins of 1.8% on operating margins of 4.4%. Combine that with the weakest farming season in years and the fact that creditors are no longer lending to farmers, it’s safe to speculate that these margins should be substantially weaker.

I fully expect the company to cut its 2009 earnings outlook on Monday night as well.

For more ideas, check out this week’s Rocket Stocks portfolio.

To find the snapbacks and potential breakouts on a regular basis, check out these Stockpickr portfolios, which I use in my own research each week:

The Daily Hot List: This must-view portfolio of what stocks are making moves and why is posted at midday each day.

Always check the Biggest Percentage Losers, a list of stocks that lost big the day before, because they can snap back hard.

When you check this list on Stockpickr, you can see which stocks are owned by the quality hedge funds and mutual funds. Pay attention to those. The funds will be buying at the lower prices and likely supporting the stock.

Ditto for the 52-week-low list. You must check the above two lists every day if you hope to find volatile stocks that can snap back

Biotech Short Squeezes: Dendreon and others can often be found in this category.Stocks Rising on Unusual Volume: These are potential breakout plays.

Stockpickr's System Trades of the Day: These are trades triggering that day in various back-tested trading systems we've developed.

Stocks With Unusual Options Activity: Perhaps someone knows something?

Latest Activist Situations: These are stocks that hedge funds are accumulating shares of and demanding change in. Believe me, these hedge funds piggyback each other. And once they start rocking the boat, things happen quickly. This should be on the must-view list.

One final place to frequent is the Answers section on Stockpickr, where ideas such as those presented in this article are thrown around daily. And you can further discuss your ideas and share opinions in Stockpickr's Member Forums section.

By James Altucher

Posted on Dec. 15, 2008