The Bear Book

"Scrape inflation off stocks, and much of the wealth they're credited with producing for investors disappears, even without a bear market."

"Buying and holding is far from the sure thing it's made out to be."

"Because there's no way to know how low the market will go, the decision to stand pat or fold can never be clear-cut."

"One way to manage a portfolio is to invest in stocks when inflation is low and the economy is doing OK, and get out of stocks when inflation is on the rise or when the economy is falling into a stupor."

"The price investors will pay for earnings varies from hour to hour, week to week, year to year, depending on the inclinations of the buyers and the sellers."

"Once the general outlook turns negative, all that's needed to start the decline is a trigger."

"Tops of markets don't follow any set design, any more than tops of mountains do."

"No chart, formula, or composite forecaster has proven infallible, and few have proven remotely reliable."

"The stock market is the one place in modern life where the better informed you are, the harder it is to make the right decision."

"Through its network of branches, the Fed can launch a new bull market or conjure a bear."

"Limitless horizons stretch before the practicing bear. For every country that's waxing, another is waning."

"People will continue to smoke, eat, drive cars, drink Coke, swallow medicine, run appliances, and make phone calls even when they're short on cash."

"When stocks are in a bear market, particularly of the inflationary variety, it pays to own cash, but don't make a habit of it."

"Bonds are for losers, and stocks are for future millionaires."

"The income stream from dividends can keep a fearful investor from abandoning stocks near the bottom of a decline, when Wall Street is demoralized."

"What got you through the bear with minimum loss can't be expected to give you maximum gains in the next bull."

"You can hardly expect a standard stock fund to offer much protection in a bear market."

"Although it's legal in most countries, short selling is vastly confusing to most investors."