Rome was successful for approximately 700 years.  This was possible because of:

1)                  A plan (read strategy)

2)                  Discipline to follow a plan (strategy)

METRICS:

We use what I consider a very good set of metrics to wit:

1)                  Technical analysis

2)                  Monetary conditions (yield curve, M2, MZM, savings, etc.)

3)                  Valuation (stocks vs. government bonds)

4)                  Sentiment (put/call ratio, odd lot sales, etc)

In essence, when the above total rating is 90% (10% cash or equivalent) it says we are expecting a 10% correction.

Currently (which I am sure all of you are interested in) the number is 100%.  Thus, we are expecting a long-term bottom to be put in place in the next 30 to 60 days and, therefore, we will begin to commit reserves.

Where did reserves come from?

Last November/December the numbers began to show we should have 10-20% in cash for an expected decline.  As usual, I was early on this.  I would rather be six months early than one week late.

We are at the threshold of the greatest economic expansion since the Roman Empire – we will be ready.

A final note:  The Romans did not do battle without armor and a shield – neither do we.

Ever Vigilant,

Jack

P.S. Rome failed because it became so successful that it felt it no longer needed/wanted a plan.  We will Never be of the opinion that we no longer need/want a plan.

P.S.S.  Never believe anyone who says “dividend/buybacks” don’t count…more on this later.