Breaking the Shackles of the 9 to 5 | by The Time & Money Group

In my report last week to my subscribers, I said the following: 

“Some may recall that last year - our timing on becoming fully invested wasn’t the best.  On almost every occasion it usually preceded a sell off.   Hopefully this time will be different, but let’s not be too careless.”

Based on Friday’s action, I don’t think that this time will be any different.  Although our Real Money portfolio closed up 1.1% for the week, it sold off 3.3% on Friday turning a great week into a good week.  All of the major indices sold off around 2.5% for the day and closed down for the week. 

Matter of fact, Friday marked the fourth consecutive losing month for the market.  I looked back over the past 10 years and this is the third time that the market (as represented by the S&P 500) has strung together four losing months.  The other two times happened 2001 and 2002.  We haven’t had five losers over that time period.  If we do happen to break the streak – we will undoubtedly be in an official bear market.  Many are already claiming that we are already there. 

Bear markets conjure up significant anxieties amongst individual investors.  Interestingly its Wall Street’s buy and hold crap, sorry for the vernacular, that does most investors in.  Sophisticated investors take profits and step aside until the storm has past.   Wall Street could teach and promote such strategies.  However, it needs its customers to buy and hold so that they can continue collecting its fees until the worst has past. 

To profit in a bear market you have three options: move money to cash, short the market or find assets that are uncorrelated to the market (like commodities).  Pick one, two or all three.  Whatever you do don’t bury your head in the sand and take solace in Wall Street’s buy and hope theory. 

As of 2/29/08, the Real Money portfolio continues to outperform the market as represented by the S&P 500: +10.8% v. -9.4%.

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