Last November when the market declined sharply, a number of managers declared that the stock market had hit the bottom. Despite those declarations, stock market indices continued their descent to new lows in the first quarter of this year. From its peak in October of 2007 to its low in March of this year, the S&P 500 index fell over

Since the beginning of 2008 (the past 21 months) the S&P 500 has lost 25%. Yet, despite having lived through the most significant stock market decline since the great depression, almost all of the investors with our proprietary system have experienced double digit increases in their portfolios. In the chart below, we show our management returns on our aggressive portfolio.

In our third quarter commentary when we noted that the markets were down 20% year to date, little did we know that the most forceful declines were still to come. In October the stock market went into a free- fall as confidence in financial institutions evaporated. There were few places to hide as stocks, corporate bonds, REITS, and even commodities