On Tuesday, the Fed offered to loan $200 billion to financial institutions for low grade securities. The Mighty Dow soared 400 points. Standard & Poor's said yesterday that the end of subprime mortgage write-downs by big banks may be in sight. Stock prices, which had opened sharply lower, moved sharply higher. The Labor Department reported this morning that consumer prices were unchanged last month. Prices of stock futures soared.

These explosive rallies are typical of bear markets and don't last very long. As I write this essay, the Mighty Dow is up a paltry 60 points from last Friday's close. The reason is that none of these events is going to end or even mitigate the bear market. The Fed, for example, who raised interest rates too high and waited too long to lower them, still believes inflation will moderate due to a slower economy. How can inflation moderate if the government continues to debase the dollar? Standard & Poor's was one of the accomplices in the subprime fiasco. So why should we believe anything they say about the subject? Finally, the CPI report is sheer BS. Am I really supposed to believe that food and energy costs moderated in February? Who are they kidding? (See my essay of 06/15/07.)

This is not a pretty picture folks and this bear market is not going to end soon. So we've got to learn to live with it and make money in it.
Last week I said, "The easy way of making money in a bear market is to sell stocks short." I know a lot of investors don't like to sell short, but it's not that hard to do. To learn how, read my Special Report which can be accessed by clicking on Research at the top of your screen, clicking on Special Reports, then clicking on "How to Short Stocks." Develop your short-selling skills by paper trading with the VectorVest Portfolio Tracker. It's easy to use and it's FREE. When you think you're ready to trade with real money, start out with small positions and always use Stop-Prices.

If none of this appeals to you, try buying Contra ETFs. I wrote an essay on this subject on November 2, 2007, one day after VectorVest signaled a Confirmed Down market. Our "Strategy of the Week" that day was "How to Make Money Using Contra ETFs." I also wrote a special note to new subscribers that day in which I said, "The Confirmed Down signal could be the entree to a long bear market. So don't be deceived by the endless parade of experts who will appear on TV and other places telling you to buy stocks."

Deception plays a major role in bear markets. Take Bear Stearns for example. Just yesterday, its Chairman said their liquidity was fine. Today they're being bailed out by the Fed. When there's a torrent of negative news, investors hope for something positive to happen and become vulnerable to spin doctors. So don't fall for the fluff. Remain positive, learn how to sell short and look for signs of rising earnings. Do these things and you won't slide down The Slippery Slope of Hope.

SELL HIGH, BUY LOW.
This week, Mr. Gordon White will show us how to "Sell High, Buy Low." Shorting stocks is the easiest way to make money in a down market. Please visit the VectorVest University to enjoy Mr. White's excellent presentation.