Fear, Greed and the End of the Rainbow
by Andrew Sarlos, Key Porter, 1997 182 pages

I really liked Fear, Greed and the End of the Rainbow. I found it most useful when our dividend-paying stocks suffered a major decline in 1998. I quoted a few sentences from Fear, Greed and the End of the Rainbow in my December 1998 report. Now, as the Dow Industrials have broken below their August 2007 low to confirm what the Dow Transport did a few weeks ago, I'm back to reading Mr. Sarlos' advice.

Let's begin with a cheerful fact. "in bear markets, dividend-paying common stocks usually take less of a stock-price hit". p58

"A major bear market traces a long, slow decline, but within it are very rapid, steep upward moves. Each of these successive waves down and up sinks the market lower. The up ticks don't last very long either, but they do give the investor the feeling that the gloom is lifting and the bear is on his way out - that is, until the next down wave begins."
"Every market rise in a bear market is an opportunity to sell." 150
"In a bear market, the slope is generally downward, and the moves up are very dramatic, unexpected and large. If you didn't get out before the crest, the top of a secondary rise in most bear markets offers the best prices you're likely to see for some time. Emotionally, you will feel you should have sold earlier (true) and that it is "too late" to sell now (not true). These are the best prices you can hope for,even though they are a major dissappointment compared with prices of, say, six months earlier." 150

"The message of this book is that you should preserve capital, not for the sake of doing so, but in order to be able to reinvest it at a level which is unthinkable today." p. 182
"An entire generation active in the markets today has never experienced a protracted period of declining stock prices." 16

"The effect of a bear market is to wring out the excesses of a speculative period, and that often takes a great deal of time and agony." p106

more later