I strongly suggest that you do not confuse being an Investors with being a Trader. I’ve been pointing out for many years that the Stock Market is greatly influenced by day-traders, flash-traders, program-trading firms, in for quick trades of a few hours, a couple of days at most, and back out again. That’s not Investing and certainly not Investing Wisely.

The problem for Investors is that they have for decades, for the most part, considered themselves to be Buy and Hold Investors, (married to the stocks and mutual funds) through both good times and bad. When they finally get discouraged, (and they do!)they get out, usually due to large losses, and they tend to stay out for very long periods. An excellent current example is / are those who have been on the sidelines since the big bear market plunge of October 2007 through early last year, not enticed back in for even part of the new bull market of last year plus.

They (Mutual Fund Investors) tend to listen to Wall Street saying they need to have a long-term perspective when their stocks and mutual funds are plunging 25% – 50% and more, and so hold on. When they do decide to ‘reposition’ their portfolio they tend to listen to mutual fund managers, and brokerage firm sales persons and spokesmen on TV shows and in magazines, advising them to buy a stock that should be 30% higher 24 months from now, without considering that it might first be 30% lower three or more months from now.

Historically (way back when) Buy and Hold strategies and long-term outlooks work well in secular bull markets, when there is /was much less downside risk, when bear markets are more spaced out, less severe, and short-lived. In secular bull markets the long term trend is up, and when bear markets end the market ‘comes back’ to its previous high in the next cyclical bull market and continues on to still higher highs, continuing to be interrupted by only occasional mild bear markets.

Those days are gone and possible gone forever.

It’s the cyclical bull markets that are temporary, not exceeding previous highs before the next cyclical bear market takes the market back down again. In both secular and cyclical bear markets Buy and Hold is probably the worst imaginable investment strategy. Not only does it not produce gains, but even the most determined Buy and Hold investors are likely to give up with the worst of timing, after their losses have become larger than they can handle either financially or emotionally.

Unfortunate for current ( NOW ) Buy and Hold investors, they don’t understand or know the difference between a secular bull and secular bear market or cyclical bull and cyclical bear market. That’s ok, only if you don’t need to know. However, IF you own a mutual fund you damn well better learn the difference and go to Cash when times begin to get rough. That’s NOW or very soon folks.

Since 1900 there have been three completed secular bull markets and three completed secular bear markets, plus the current secular bear that began in 2001 and has run for 10 years now.

The last secular bear market looked like this: It was 17 years of investors waiting for the market ‘to come back’, becoming hopeful with each cyclical bull market, only to be devastated by the next cyclical bear that plunged the market again. Wonderful opportunities in both directions for market-timers, but terrible for Buy and Hold investors.

Are you starting to get my point? Things change in this world and believe me they have (past tense) changed in the Stock Market — and it’s you that should know best. Yours and most ever one else’s portfolio is DOWN.

There have been two wonderful cyclical bull markets, those of 2003-2007, and 2009?. And two devastating cyclical bear markets, those of 2000-2002, and 2007–2009 that have created what pundits are calling ‘the lost decade’. Virtually no one is making money, even the big names that did so well until about a decade ago. Those good times are gone, gone forever.

For those of you that have followed my Forecasting over the years you know it has been very accurate.

So, I believe more investors need to adopt a shorter-term focus, and take advantage of both upside – Buying Opportunities and downside Shorting Opportunities in what is surely going to be another Cyclical Bear Market.

For me this is serious stuff. I sincerely hope it is for you folks that are truly interested in making money consistently.

So, the good news is I have figured out how to make money (Despite the endless flow of Washington’s way of running the Economy and the Country) and without hurting anyone like You (like Washington, Wall Street and Mutual Funds DO!), it’s the little people that are getting screwed and that’s a FACT and this is.

Solid / no BS – Stock Market Analytics and ECONOMICS!

Hopefully YOU see what I share as a POSITVE CONTRIBUTION about how to go about making money (the hard way I do my homework!).

Keep Smiling, and have fun Investing Wisely.
Steve Bauer