Once a trend is established, either up or down, it usually follows the basic law of physics that a body in motion tends to stay in motion. That was certainly the case over the past week as downward momentum accelerated and the November 08 lows were taken out with yesterday’s drubbing.

The widely watched 752 level on the S&P; 500 was violated, which means we’re back to square one in terms of looking for a new potential bottom formation. Those who engaged in the hazardous sport of bottom fishing late last year will now have to scramble for the exits to avoid further losses.

Many readers, who suggested last December that I modify the domestic trend tracking rules to allow for a faster re-entry, are hopefully getting the picture that being overeager does not always pay off—at least not in this economic environment.

Personally, I am excited about these new lows as they will bring us closer to the eventual real bottom wherever that may me. Additionally, it allows more time for our trend line to descend even further, which will present us with the opportunity to deploy our assets again at much lower prices.

The flip side is that those buy and holders still hanging on for dear life will be hurt even more as the bear market deepens and inflicts further portfolio pain. With the S&P; 500 having lost 38% in 2008, and almost 18% year-to-date, the picture for those having stayed in fully invested positions is now showing that they have reached danger territory.

Last Sunday, I talked about the impossibility of being able to please all the people all of the time with my blogging efforts. I received a lot of commentary and emails, some of which you can review here.

Feedback is a valuable component of any business or any writer whether he gets paid for his efforts or makes a voluntary contribution. If you work for a company, the feedback you receive consists of an annual job review, along with raises, pay cuts or even termination.

A business receives feedback from its customers although many organizations seem to have forgotten that fact and don’t show too much interest in how their customers feel about them. I’m sure you have come across this annoying fact many times.

Then there are others who try to take feedback to the ultimate level. Some of the better known fast food chains insist that their top ivory tower executives spend at least one week a year behind the service counter, so that they never forget who generates the revenues.

And who can forget the wonderings of Lee Iacocca, who walked the assembly lines of Chrysler talking to the mechanics as to how things could be improved. There is no better way to solicit feedback than from the man who actually does the work.

Then there is the other extreme that comes to light when you have too much money and you are surrounded only by brown-nosing “yes-men” so that the only reality you are exposed to is phony compliments telling you how great you are. Entertainer Michael Jackson comes to mind.

The bottom line is that we’re all better off if we get some kind of feedback regarding our efforts. Usually that requires that you check your ego at the door first, before wading into the unknown. I for one appreciated your comments, which where all constructive and some contained valuable suggestions, however, most opinions were evenly divided, which supports my theme that you can’t please everybody.

Many readers liked my references to other articles, some didn’t. I will keep continuing on the same path, but try to condense and reduce wherever I can, which I already attempted this past week.

Everybody has an opinion on this subject, even former President Bush had to chime in as the following video clip shows.

http://www.youtube.com/get_player

Don’t kill the messenger; I thought this was very funny.

In regards to my recent post “7 Years Of Wealth Wiped Out,” reader VR had this comment:

It’s almost funny when I try to talk people out of buy-and-hold strategy and point them to your blog for market-timing.

Everyone is afraid of missing out on a big rally. They don’t really mind losing more than 50% of their investment to a bear.

The worst is that no one believes that the market could go further down from this level.

It’s hard for me to believe that anyone would be more concerned about missing out on a rally than protecting himself from downside losses. I suppose that old habits die hard because the buy and hold proponents have done a great job of brainwashing the public for a long time.

However, numerical facts, which most don’t bother to look at, show a different picture. You most certainly remember the last bear market of 2000, the brunt of which we avoided by selling on 10/13/2000. On that date, the S&P; 500 stood at 1,374. Two days ago, it closed at 779, which is a loss of about 43% over some 8-1/2 years.

Since most investors and professionals alike are desperately trying to beat the S&P; 500 performance, and most fail to do so, many portfolios have done worse. Looking at it another way, year over year, this century has not been kind to the buy-and-hold investor as the following chart shows:

This means a portfolio with a starting value of $100,000 would now be worth $68,000. 8 years of investing via buying and holding and nothing but losses to show for.

If the markets don’t provide us with a significant rally over the next couple of years, many investors will become acquainted with our own version of the “lost decade.”

Since bear markets are a fact of life, and can strike at anytime, a smart investor needs to recognize that fact by using some sort of an exit strategy. This century has shown that selling at the right time is far more important than when and what you buy.

Not selling can have a devastating effect on your portfolio, as we’ve seen, while missing out on the initial stages of a bull market will merely reduce your potential profits.

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

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

Continued worry about the survival of the banking system pulled the major indexes deeper into bear territory.

Our Trend Tracking Index (TTI) for domestic funds/ETFs remains below its trend line (red) by -10.40% thereby confirming the current bear market trend.



The international index now remains -20.43% below its own trend line, keeping us on the sidelines.

MSN Money reported that another alleged fraud has taken place (sorry, no link):