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Gold/Mining/Energy : A to Z Junior Mining Research Site -- Ignore unavailable to you. Want to Upgrade?

To: 4figureau who wrote (4254)	4/30/2003 9:58:07 AM
From: 4figureau	Respond to of 5423

Bear Market Survival Richard Russell Dow Theory Letters April 30, 2003 So what's the answer to surviving a great primary bear market? The answer is discipline and patience. Big bear markets are taking longer now than ever before. They are taking longer because the politicians that run government believe they can hold back and even reverse the primary trend of the market and the economy. But what government interference does is to extend bear markets, introduce new problems, and in the end render bear markets more vicious and costly than they would otherwise have been if allowed to correct "normally" on their own. Government manipulation in a bear market is comparable to a man with cancer being kept high on cocaine. Sure, he feels "better." But as his health deteriorates, he increases his intake of cocaine. He continues to feel better, although he has periodic sinking spells. The cocaine doses are increased again, and this process continues until finally the patient is so sick that the cocaine fails to cover up anything. In the end, the patient expires. The coke has not worked, except to mask what is really happening. So what's the answer to surviving the bear? I'm aware that there is no perfect answer. To be honest, I don't know if there's a good answer because each bear market is different. But here's my suggestion. Our best bet is to try to keep our heads above water via safety and compounding. What I've done, personally, is to bet on cash plus two items -- AAA municipal bonds and some utility stocks and preferreds. The cash is strictly for liquidity. Holding cash is your admission that you don't know anything intelligent to do (when I say cash, I'm talking about T-bills and money market funds). As for the utility stocks, I've named them in many previous comments. Then there's the insurance of a position in gold. I've talked about gold until subscribers must be tired of hearing about it, but to make it short, put 5% of you assets in gold coins and another 5% in gold shares. Finally, I advise subscribers to get out of debt. One item that can kill you in a bear market is leverage. As a general rule, leverage in a bull market tends to work for you; leverage in a bear market tends to work against you. We're in a bear market -- therefore, get out of debt and get liquid. 321gold.com