I received an email this week chastising me for laughing at the morons on CNBC. I apologize for saying that...but only because I should have been crying. It really saddens me to see how CNBC's "Wall Street" approach to investing has hurt their viewers in this bear market. But CNBC is not alone in this regard, the conventional wisdom teaches us bad practices.

I began investing in stocks about fifty years ago and I've probably made every mistake in the book. My worst mistake was selling all my stocks in December 1974, at the very bottom of the '73-'74 bear market. I was very discouraged because I hadn't made a dime after 15 years of buying and selling stocks. I won't call it investing, but I wasn't a Trader either. Nevertheless, I was so dumb I was lucky I didn't lose my shirt. Yes, I had a broker from Merrill Lynch. Yes, I belonged to an NAIC stock club. Yes, I read books on investing, including Benjamin Graham's Intelligent Investor. Yes, I read Barron's and Forbes and the Wall Street Journal. Yes, I used Value Line. But it didn't do any good because my techniques were bad and I couldn't tell the difference between a Bull market and a Bear market.

For example, my ex-broker always called me when he saw a stock going down in price. He was the expert, so I usually bought it. You know what? It usually kept going down and I was stuck with it. One of my pet peeves with CNBC is that even on the worst down days, they ask, "Is this a buying opportunity? What are you buying now?" It appalls me to see Cramer go into his act, saying, "'Mon back, mon back," urging his listeners to buy, buy, buy on a pullback. Boo-yah, baby...until the falling knife goes through your heart. The bottom line: Never buy stocks on the way down.

Another pet peeve of mine is this business of buy and hold. On June 28, 2008, an article written by Mr. Larry Light appeared in the Wall Street Journal. It was entitled, "What to Do to Survive This Market." It said, "There's a decent argument to be made for buy and hold. Aside from the absurdity of liquidating an entire equity portfolio - the tax headaches would be epic - investors ultimately end up better off than if they had tried to sell at the top and buy at the bottom." Really? I think I'm going to call this guy and introduce him to the "Yellow Brick Road."

Your top priority right now must be to preserve capital. If you haven't already sold your stocks and gone into cash by this time, I don't think you should do it now. But you should learn how to protect your portfolio. Please see my June 29, 2007 essay on Portfolio Protection. Learn how to use Option Collars. If you do, you'll have the money to buy stocks when this bear market ends, producing bargain prices. This is the silver lining. So survive now and be ready to look for The Silver Lining.

PLANNING YOUR RE-ENTRY.
We were hoping to go long two weeks ago, on Friday September 26th, when stock prices went down instead of up. They got crushed the following Monday and havoc has reigned supreme ever since. So why didn't we go short and make a lot of money? Simply because the Buy/Sell Ratio, BSR, closed at 0.09 on Monday, September 29th, and our experience has shown that it's not a good idea to go short when the BSR is below 0.20. In fact, it's the time to think about going long and that's what we've been doing. But we're not going long until we see solid signs of a sustainable recovery. First I want to see an explosive rebound. Then I want to see a good follow-up day. Finally I want to see the Primary Wave flash an Up signal.