Two days of rebounding action pushed the major indexes higher and instilled some confidence that maybe some support can be found at these levels. Of course, it’s still anybody’s guess if this is just a dead cat bounce.

Below please find the link to the most recent ETF Master list, which has been updated with yesterday’s closing prices. This will enable you to work with more recent data. You can download the file at:

http://www.successful-investment.com/SSTables/ETFMaster102307.pdf

Our Trend Tracking Indexes (TTIs) recovered from last week’s drubbing and still remain in bullish territory with the domestic and international TTI having moved above their long term trend lines by +6.13% and +3.17% respectively.

In view of last week’s market decline, reader Govind pointed to an article reviewing some of the historical market corrections.

Ranging from the precious metals crash in 1980, the emerging markets debt crisis in 1998 to the dot-com bust and currently the subprime mortgage and housing debacle, the underlying theme seems to be the same: Crashes and bear markets are part of history and will be with us in the future. This is not a prediction on my part; it’s pretty much a built-in economic mechanism which rears its ugly head every so often. As the article correctly stated “Rotating bubbles are the nature of capitalism.”

In other words, you need to come to grips with the fact that these events occur randomly and those who aim to predict are more likely to be wrong than right as I posted about on Saturday.

Since these bubbles, or the deflation of them, can’t be anticipated, having an alternative plan to deal with them is paramount. The only way I have found over the past 25 years is use a combination of trend tracking and trailing stop losses to protect your capital during times of uncertainty. While this approach is not designed to avoid any 3% hiccup in the market, it will keep you away from the devastating blows that have pushed portfolios to 50% and 60% losses.

If you heard me say this before, you are right; it’s the most crucial part of an investment strategy and far more important than being exposed to the latest and greatest fund or ETF.

The events of last week have shown again that we are playing global game and that there are no safe havens. In view of that fact, you can do the next best thing: Give your portfolio a little room to move within a certain range; if that range is violated on the downside, get out!

Whenever markets pull back, I like to view those areas that not only survived but actually posted some gains. A good way is to look at the ETF Master list since it contains some 500 ETFs including all types of orientations.

Besides the obvious winners, short funds, there have been others that bucked last week’s run to the downside:

Here are the top 10 winners along with last week’s performance as well as their M-Index rating:

USO (+4.91%, 20)
DBO (+4.01%, 10)
GSG (+3.56%, 14)
DBC (+2.81%, 11)
DBA (+2.78%, 7)
DBE (+2.70%, 7)
BLV (+2.66%, 2)
FXY (+2.63%, 1)
TLH (+2.54%, 2)
DCR (+2.39%, -4)

In case you are interested, the worst performer was UTH (-14.69%, -8). While we currently have no investments in any of these ETFs, this may change if the momentum numbers continue to show improvements to the upside.

Occasionally, I am being asked by various readers about my opinion on what I think where the market is headed or how a certain no load fund or ETF might perform in the future.

As I try to emphasize repeatedly in my writings, I follow trends, and I am not in the business of predicting future events. Personally, I think making any kind of prediction is for losers only because it simply can’t be done with any reliability.

Nassim Taleb’s book “The Black Swan,” about which I wrote a few weeks ago, had an excerpt that best describes the “expert” problem we are all facing, especially in the financial services industry. He refers to the work of psychologist Philip Tetlock as follows:

“Tetlock studied the business of political and economical “experts.” He asked various specialists to judge the likelihood of a number of political, economic and military events occurring within a specified time frame (about five years ahead). The outcomes represented a total number of around twenty-seven thousand predictions, involving close to three hundred specialists. Economists represented about a quarter of his sample.

Well published professors had no advantage over journalists. The only regularity Tetlock found was the negative effect of reputation on prediction: those who had a big reputation were worse predictors than those who had none.”

So, next time you are tuned into in one of those testosterone-charged talking head shows on the financial news channel, try reading this article again and realize that most financial news is geared towards entertainment with absolutely no investment value.

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

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

The bears overpowered the bulls this week and all major indexes ended sharply lower.

Our Trend Tracking Index (TTI) for domestic funds/ETFs has moved to +5.10% above its long-term trend line (red) as the chart below shows:

The international index inched lower to remain +2.14% above its own trend line, keeping us still on the buy side.

For more details, and the latest market commentary, as well as the updated No load Fund/ETF StatSheet, please see the above link.

I guess there is a reason that I called this blog ‘The Wall Street Bully.’ Sometimes it is very difficult for me to silently accept and go along with new ideas that are essentially a different twist simply designed as a new marketing plot with no tangible benefit to the investor; at least not to my way of thinking.

I was reminded of that when I read a story in CNNMoney.com called “Northern Trust Introduces Multi manager Large Cap Fund.” The idea behind this scheme is to set up a manager of managers who allocates “assets to four sub-advisers chosen for their distinct investment style in selecting stocks for their portion of the Fund’s portfolio. This approach is designed to offer the optimal combination of risk and return characteristics, resulting in a style-neutral diversified fund.”

A casual reader could get the impression that this type of fund will be superior and can be held without consideration to market behavior. Wrong! These funds will fluctuate and head south (translation: lose money) in a bear market just as much as any other equity fund. It does not matter how many managers you put at the helm of this undertaking, the general direction of the market is the force that determines performance – nothing else.

My weekly StatSheet tracks 6 of Northern Trust’s funds as well, with the top ones listed in the number 52 spot (NOEQX and NOMCX) out of 596. NSGRX follows closely behind, but the other 3, which shall remain nameless, have been underperformers.

My point is the same over and over again: Make sure you have a plan to protect yourself from downside risk even if you invest in multi manager funds. The current summer/fall and hopefully year-end rebound rally will not last forever.