The date October 13, 2000 will forever be embedded in my



Mind. It was the day after our mutual fund trend tracking

Indicator had broken its long-term trend line and I sold

100% of my clients? invested positions (and my own) and

Moved the proceeds to the safety of money market

Accounts. Some people thought we were nuts, but I had

Come to trust the numbers.

The shake out in the stock market, which started in

April 2000, had all major indexes coming off their highs,

Violently followed by just as strong rally attempts. The roller

Coaster ride was so extreme that even usually slow moving

Mutual funds behaved as erratically as tech stocks.

By October, the markets had settled into a definable

Downtrend, at least according to my indicators. We sat

Safely on the sidelines and watched the unfolding of what is

Now considered to be one of the worst bear markets in

History.

By April 2001 the markets really had taken a dive, but Wall

Street analysts, brokers and the financial press continued to

Harp on the great buying opportunity this presented. Buying

On dips, dollar cost averaging and ?V? type recovery were

Continuously hyped to the unsuspecting public.

By the end of the year, and after the tragic events of 911, the

Markets were even lower and people began to wake up to the

fact that the investing rules of the ?90s were no longer

applicable. Stories of investors having lost in excess of 50%

Of their portfolio value was the norm.

Why bring this up now? To illustrate the point that I have

Continuously propounded throughout the 90s; that a

Methodical, objective approach with clearly defined Buy and

Sell signals is a ?must? for any investor.

To say it more bluntly: If you buy an investment and you

Don't have a clear strategy for taking profits if it goes your

Way, or taking a small loss if it goes against you, you are

Not investing; you are merely gambling.

The last 2-1/2 years clearly illustrate that it is as important

To be out of the market during bad times, as it is to be in the

Market during good times. Want proof?

According to InvesTech's monthly newsletter it turns out that,

Measuring from 1928 to 2002, if you started with $10 and you

Followed the famous buy-and-hold strategy, that $10 would

Become $10,957.

If you somehow missed the best 30 months, your $10 would

Only be $154. However, if you managed to miss the 30 worst

Months, your $10 would be $1,317,803! Thus, my point:

Missing the worst periods has profound impact on long-run

Compounding. There are times when you end up better off by

Being out of the market.

Interestingly enough, if you missed the 30 best months and

The 30 worst months, your $10 would still be worth $18,558,

Which is 80% higher than the buy-and-hold strategy? This all

Comes about because stock prices generally go down faster

Than they go up.

Wall Street and most people tend to overlook the value of

Minimizing loss and that is exactly why the bear demolished

More than 50% of many peoples' portfolios while I and those

Who trusted my advice escaped the worst of the beasts

Rampage.