You might say it's just dumb luck, but our Market Timing System has had us playing defense or the downside of the market on every major downturn since VectorVest was created. But it isn't dumb luck...it's the way our Market Timing System is designed.

Take the current downturn, for example. There was no way to predict what happened yesterday, but that doesn't matter. What matters is that our Market Timing System informed us that the market was moving lower and we advised you well in advance of yesterday's historic events not to buy stocks and to play the market with a bias to the downside. This guidance wasn't dumb luck. It was based upon factual, objective analysis.

On Monday, May 3rd, the market rallied sharply. The Primary Wave, i.e., the week-over-week trend of the Price of the VectorVest Composite, however, remained in a Dn mode. So our guidance remained the same as it had been on Friday, April 30th: Prudent Investors should not to buy stocks and Aggressive Investors and Traders should play the market with a bias to the downside.

On Tuesday, May 4th, the market dropped sharply and a Red Light appeared in the Price column of the Color Guard. So we strengthened our guidance that evening by removing the words, "with a bias," and said, "Aggressive Investors and Traders should play the market to the downside." We also went into Cash in the "Riding-the-Wave" portfolio and said we would go short if the market continued to move lower.

On Wednesday, May 5th, we went short in the Riding-the-Wave portfolio and we had our Stops in place in our other portfolios. So yesterday's market collapse allowed the RTW portfolio to make money and caused limited damage in the other portfolios.

We've been through a lot of rough down days in the 22 years we've been in business and we have survived them all. Much of the credit goes to our Market Timing System. But no Market Timing System can predict an unexpected, catastrophic event such as a terrorist attack. We were lucky to be playing the market to the downside when 9/11 occurred and that's why techniques, such as using Stop Prices, selling Covered Calls, buying Put Options or simply trimming investment exposure are also used to reduce portfolio risk. But the most important thing to do, is know market direction.

Our Market Timing System has been telling us whether the market is rising or falling for many years, and it will continue to do so. I have come to trust it and depend upon it...like An Old Friend.