Stocks fell heavily again over the past week with a careless thump, like a dog slipping to the floor from the couch in his sleep.

It hasn’t been the sort of spectacular splat that demands your attention, but one of those grinding declines that just seems to silently sap the energy out of the room.

All is Not Well in Corporate America

Emblematic of the situation is software goliath Microsoft (MSFT), which reported disappointing quarterly earnings and followed that up by saying it wouldn’t provide any more guidance.

Just what we needed: less transparency. The company also announced it would cut up to 5,000 jobs over the next 18 months, which is just a drop in the bucket for a company that employs 91,000 full-timers and many tens of thousands more contractors.

I was just over at the Microsoft campus in Redmond for a meeting and saw that they are building a gigantic new campus between the 520 Freeway and 148th Street. The company has also recently expanded into high-rises in nearby Bellevue, so it’s pretty hard to see any real slowdown in hiring, much less cuts.

I’m sure this is true at many similar large companies. It’s one thing to say you are going to slash jobs as a way to pander to shareholders, but it’s another thing to actually do it, as these are not numbers that regulators actually check.

Stubborn growth at all costs is one of the leading sources of rot at big companies. It makes them do things that make no sense for anyone but executives who are compensated strictly on growth measures.

Growth at all costs is one of the main reasons that banks got into trouble, and it is the same at many of our largest tech firms — not just MSFT, but also Google (GOOG) and Nokia (NOK).

Yet it’s the destruction of value at MSFT over the past 11 years that just wears me out as an observer. It has grown more and more bloated with employees, real estate, buildings, compensation and expenses. And none of it has found its way down to shareholders. Where’s the return on all this investment?

It’s no wonder that buy and hold is dead. Anyone who has held onto their MSFT stock for the past dozen years is exactly flat. They would have been much better off with risk-free Treasurys.

It’s not just MSFT, though.

>

The performance of the big software maker is emblematic of the disastrous approach to investing that most of the public has taken over the past decade.

Trade the Market

The experts at brokerages brainwashed the public into thinking that they had to buy successful companies with good products and smart management and hold them forever. The fact that this has been patently untrue for many long stretches of time never seemed to dissuade the experts from this mantra.

It’s something that brokers can reassuringly tell disappointed clients on the phone during portfolio reviews, but it’s simply false. Joining Microsoft below their November lows were wireless giant Nokia and insurance giant Aflac (AFL).

In my three decades of investing, the only method that I have seen consistently work is to buy shares of companies that are fast-growing, cheap and innovative — and are also in sectors, market cap groups or investment styles that the market currently favors.

And even then, only hold for a relatively short while, such as one to six months. That is the whole idea behind the technique that we employ in my Trader’s Advantage advisory service.

And it does work, so long as the entire market does not go into a total state of collapse as it did in November last year.

In December, our StrataGem positions rose 7.9% as a group. This month, our StrataGem names are up 3.1% so far. In the same time span, the S&P 500 is down 7.7%, while banks, which experts said were deeply undervalued back in November, are down 30%.

Bulls Still Waiting

When major stocks slip beneath prior major lows, the rest of the market typically follows. The powers that be, have ways to keep the broad-market averages up while they are sneaking out of most stocks. This prevents most investors from realizing that the jig is up and that the ground is giving way beneath their feet.

The bottom line is that the market failed to follow through on last Wednesday’s rally and looks like one more in a series of one-day wonders. But all is not lost for bulls. The line in the sand is the 804 level.

As long as the bulls can stay above it, they can make a case that a new bottom is being set, and then if the market moves higher from there on swelling volume, they will say it’s a higher low, and all is well. You know that I don’t believe that’s the case, but stranger things have happened. Never say never.

Use Your Noodle

As Americans hunker down at the prospect of a prolonged recession, investors are scouring the grocery shelves for staple foods that are both cheap and filling. And what they are finding is spaghetti, a market that is very well-served by one of our leading StrataGem positions, American Italian Pasta (AIPC).

Obviously, pasta has been a mainstay at the cheap end of the price spectrum. It is also a particularly nutritious meal that goes a long way, making it a popular choice for health-conscious people looking to save money.

Tough economic times are only part of the reason. Readers surely recall the country’s recent infatuation with trendy low carbohydrate diets like the Atkins program. The National Pasta Association says it has noticed a ”renewed vigor” in pasta since.

We could only stay away for so long, it seems. According to Nielsen researchers, total pasta consumption rose crisply in 2008.

AIPC has ridden the noodle renaissance in style. One of the biggest producers of dry pasta in the country, its stock price bottomed out last March at $4.40 a share, and has since surged to $24.

That’s a 350% increase in 10 months, and its likely going higher as long as the recession stays around. (The S&P fell about 40% in the same span).

It’s worth noting that almost a quarter of AIPC’s sales are generated through Wal-Mart, where consumers will increasingly visit as pennies are pinched.

AIPC’s numbers leave room for optimism. In a market that has smashed price/earnings multiples, it is sporting a fat 24. Even mighty Kraft (KFT) is only accorded a 19 multiple.

The company reported $19 million in earnings in 2008, triple its total the year before. Revenue hit just over $171 million, a 43% year-over-year boost that continued right through the last quarter, when it reported fourth-quarter revenue up 47%. The stock jumped the next day, rising from $16 a share to $24.

AIPC chief executive Jack Kelly attributed the success to the company’s laser-like focus on just one thing: cheap, high-quality carbs.

Kelly forecasts an increase in sales in 2009, a rarity these days, reflecting an increase in bargain-hungry shoppers. Rising food prices in the rest of the store will push consumers to forego pricier meals and buy pasta in bulk.

They make it all: macaroni, spaghetti, fettuccini, lasagna, rigatoni, even soup mixes. And they’ve begun focusing on organic products, whole grains and enriched multi-grains. Consumers get both affordability and healthy choices.

Some analysts don’t see AIPC’s success lasting much longer, but StrataGem disagrees. Investors are looking for growth in this market starved for stars, and this is one that stands out as one company that can actually take advantage of consumers’ changing habits.

For more ideas along these lines, check out my Trader’s Advantage service.

This article was written by Jon Markman, contributor to InvestorPlace Media. For more actionable insights likes this, visit www.InvestorPlace.com.