My latest No Load Fund/ETF Tracker has been posted at:

http://www.successful-investment.com/newsletter-archive.php

The bulls came out charging after the S&P; 500 made a 12-year low on Monday, and pulled the major indexes out of the doldrums.

Our Trend Tracking Index (TTI) for domestic funds/ETFs remains below its trend line (red) by -9.47% thereby confirming the current bear market trend.



The international index now remains -17.28% below its own trend line, keeping us on the sidelines.

To me, it’s simply amazing that masses of investors tune into financial news shows, like CNBC, and actually take the offered information as credible advice.

It’s pretty sad that serious money matters are being marketed purely based on entertainment value and not on the basis of what might really make sense in the current market environment.

The bias in these shows towards “there has to be something we can buy right now” is obvious despite that fact that a wise investment position in the midst of the worst bear market in history would be in money market on the sidelines.

Funnyman Jon Stewart took a shot at CNBC in the following video clip, which is very funny but also spot on. Enjoy it.

It was bound to happen sooner or later. No matter how deeply we are entrenched in a bear market, there will be rallies based on short covering and hope that economic improvement lurks around the corner.

That appeared to be the case yesterday, and we’ll have to wait and see if this will be a substantial rebound or just another one day event. It could have very well been a bounce of the 680 support level, since these price points are not exactly chiseled in stone.

On the other side of the spectrum, as I posted in “Looking for support,” overhead resistance lurks at the 741 level for the S&P; 500. Watch that point, if the rally should carry us that high.

Keep in mind that bear market rallies can be deceiving by their power and duration. From the November 20th closing low, we witnessed a 20% rally over 6 weeks, which many mistook for a new bull market. As we marched into 2009, the rally reversed and we’re down again, as measured by the S&P; 500, having lost 20.31% year-to-date.

One of the drivers for today’s rally was Citigroup’s disclosure that they are enjoying their best quarterly performance since 2007. Duh! Since they’ve received some $150 billion in assistance, shouldn’t they be showing some improvement?

I was scanning the news to see if Citi made a more appropriate statement to go along with their above announcement, maybe along the lines of “we’re glad we’re improving and hope that this is just the beginning so that we can start paying back the assistance you tax payers have given us.”

Anything showing a little humility and gratitude would have gone a long way to improve the negative PR; but no, I found nothing and realized that we will never hear those words, as long as the “me-me-me” corporate attitude prevails.

As almost has become a habit at the beginning of a new week, the market took another hit to the downside yesterday.

While the damage was only around 1% for the major averages, many technicians will be now slobbering over the closing numbers as the support level of 680 on the S&P; 500 was taken out.

I reported in “Looking for support,” that once the 680 level is broken to the downside, the next support will be at 600, which translates to another 11% drop from yesterday’s close. Ouch; that’s really going to hurt, for those who are still desperately holding on to bullish investments.

Economist Nouriel Roubini had this to say in a recent interview:

Reader Sig had this comment after reading my new e-book “The Simple Hedge Strategy:”

First let me thank you for your continued effort to educate and inform us neophytes. I really appreciate your efforts on our behalf.

My question is this: I have found there is a 90 day holding period on most mutual funds. Am I correct, and if so, how does that work with this hedging information?

Yes, that is correct. Most brokerage firms have a 90-day holding period. That does not mean you can’t make adjustments to your mutual funds, but you will be charged for it. With most brokerage firms that should not have other dire consequences, such as you being considered a frequent trader.

All investment advisors usually rebalance once a quarter. However, the brokerage firm will charge them (and you) an early redemption fee if executed within 90 days. In the case of my custodian (Schwab), that would be $50 per mutual fund adjustment. If you run into problems with rebalancing by using the buy-and-hold superpowers (Vanguard and Fidelity), I suggest you move your account elsewhere.

There are 2 ways to get around the early redemption problem altogether when using my hedge strategy:

1. Make your rebalance adjustment with the short position (SH), and you will only pay the ETF trading fee, which in most cases is around $12.95.

2. Use only ETFs, if that is your mode of operation, and you won’t have to deal with that issue at all.

I think these ideas will help you work around those common mutual fund limitations.

Despite last year’s (and this year’s) market collapse there are still plenty of writers, brokers and others who simply don’t get it. They have stuck to their proven method of losing a large amount of their portfolio value in record time due to, well, sheer ignorance.

Reader GH had this to say on the subject:

You simply must visit this page and ponder the nonsense.

Farrell and his followers never give up.

I have always chuckled about the “lazy portfolios” over the years, since they too ignore the fact that bullish portfolios will get killed in a bear market—no exceptions. MarketWatch continues to waste readers’ time by featuring the returns of those portfolios as shown in the following table:




If you are a buy and hold investor, you have now earned the right, if you had invested in these portfolios, to pound your chest and proudly declare having outperformed the S&P; 500.

Such perverse opinions are passed down from Wall Street. Some genius in the past figured out that, as a fund or money manager, all you have to do is outperform the S&P; 500, and you are a winner. The fact that you still lost some 33% is really immaterial; your investors are sure to forgive you.

Until the public finally wakes up to the fact that they are getting shafted over and over and start voting with their feet by leaving, it’ll be business as usual.

In a sense, we are our own worst enemy since deep down we’re always eager to accept something for nothing. Lazy portfolios promote that theme and, until people are willing to step up to the plate by taking responsibility, considering pros and cons of various investment approaches, they will always be left holding the empty investment bag when the bear rears its ugly head.