Brick walls are everywhere in 2008…

That’s how to best describe one of the worst calendar years for global investors since 1974. With the MSCI World Index down 14% thus far in 2008, we just overtook 2002 in terms of negative total return. You have to go back to Nixon and Watergate to find an equally poor stock-market performance after barely seven months of trading.

But it’s not just global equities getting slammed in 2008.

Other relatively conservative investments have been crushed.

Real estate investment trusts (REITs) are down another 3.5% this year; high-yield bonds and investment-grade corporate bonds are down over 3% and convertible bonds have declined more than 5%. Even super-safe Treasury bonds have risen just 2.3% -- barely a break-even proposition once you include surging inflation and taxes.

To be sure, commodities and foreign currencies have been the only two asset classes that have logged solid returns in a bad year for investors. But even here, commodities and many foreign currencies have produced negative total returns since late June as the dollar has stabilized against most currencies; commodities are now correcting heavily after a major rally since last fall and sit 13% off their best levels. The mighty euro, up 7% this year against the dollar, has actually declined 5% from its all-time high. And the yen is struggling since March, down more than 9%.

Since the beginning of July the majority of assets that gained in value in a wicked 2008 are in the process of reversing violently. That’s especially true for commodities where the grains, energy, base metals and most precious metals are in a nosedive. Anyone over-weighted in raw materials will tell you July is a painful month for hard assets. For the record, the summer is also typically a bad time of the year for natural resources. That’s certainly true now.

As for the benefits of international diversification, forget it. It’s a horror story overseas.

After posting incredible triple-digit gains over the last several years, the emerging markets are now submerging markets. India, China, Russia and even Brazil (BRICs) are now deep in the red this year. Soaring food and energy prices are seriously denting emerging market domestic consumption coupled by a reduction in fuel subsidies in China and elsewhere. In 2008, the BRICS have crashed over 16% while the MSCI Emerging Markets Index has tanked more than 15%.

Finally, if you’re sitting pretty in cash and T-bills, congratulations!

Cash, despite offering lowly yields under 2% at least protects your nominal principal. But adjusted for inflation, T-bills are paying about 60% less than the official rate of U.S. inflation at 5% -- a 17-year high. Compared to stocks this year, at least you’ve got your principal.

At some point, of course, this bear market will end. I suspect that point will arrive when housing bottoms and the credit crisis finally ebbs. Most market lows historically arrive in the fall and I think this one won’t be any different. October or November might offer excellent entry points for investors – IF housing and credit bottom. Also, a sharply lower oil price would be great for stocks.

Have a good weekend.