1) DOLLAR-COST AVERAGE IN WHEN THE MARKET IS FALLING:

I don’t try to time or predict the market but rather try to hedge whether it goes up or down. I firmly believe in dollar-cost averaging when the market is falling rather than trying to predict where the bottom is. With this strategy the most important tool is my model because this model will clearly identify which companies have the best income statement and balance sheet fundamentals, and the cash flow models that will ensure their long-term viability and sustainability even in the toughest macro bear markets. The model gives me confidence to buy when the stock is falling because I know I am getting a discount on the price. It’s just a matter of time.

2) CONSOLIDATE WHEN THE MARKET RISES:

Watch the market closely as it goes up and down to see which stocks are rising more when it goes up and not declining as much as others when the market falls. This will tell you who the market leaders are. As the market rises sell the under-performers and consolidate them into the best performers in the individual sector that is rising. This will maximize profitability.

3) HOW TO NAVIGATE DIFFICULT TECHNICAL RALLIES:

Technical rallies have proven to be a difficult challenge because they are not supported by underlying fundamentals. There appears to be no identifiable reason why a sector “pops up” all at once and includes approximately 80-90% of the stocks in any given sector.

The best way to prepare for this is to be properly allocated in the sector long before it “pops up. long-term stocks should be vetted by my model before it “pops up.” If this is not done and sector is not properly allocated before it “pops” you will have to scramble and do the following:

Invest ASAP in all stocks that show outperformance price appreciation in 1-day and 5-day periods. A technical rally like this may last for a few weeks or a few months. Watch them closely, on a daily and weekly basis. Sell the stocks that begin to underperform and transfer the money to stocks that continue to outperform. Watch closely, to determine which stocks meet my model’s criteria because one of these stocks will eventually turn out to be the market leader. It’s important to note that along with everything else, these market leaders change overtime. For example, Apple and Microsoft have been the Hi-Tech sector market leaders for years, now it appears semiconductors, led by NVIDIA are the Hi-Tech market leaders.

4) HOW TO INVEST IN SECTORS THAT ARE FLAT:

Sectors that are currently flat should be properly allocated in line with S&P sector percentage. The investments need to be positioned only in stocks that have been vetted by the model and have proven strong balance sheets with sustainable cash flow models. This is very important because if the sector and the stocks in it go down, you have to be prepared to invest more and follow it down. My model gives us confidence and conviction when it is needed the most.

5) THE STRATEGY IS CENTERED AROUND MAXIMIZING THE USEFULNESS OF THE MODEL AND MONITORING, MONITORING, AND MONITORING:

Going forward, I will compare each of my sector’s performance to the individual SPDR sector funds on a daily, weekly and monthly basis. The goal is to pick the best stocks in the short-run and in the long-run compared to the S&P sector index averages and the overall S&P average.