The call for this week: On my desk is a book by Ned Davis, Being Right or Making Money. Since I’m often wrong (e.g. being too cautious for the past 2 months), but usually able to avoid big losses, I opt for making money. To that point, the bears have been wrong since the March lows, often citing all the old mantras that took us to those lows in the first place.

To me, the current markets feel more like 2003, when the S&P 500 rallied from its March lows of roughly 800 into its June highs of around 1000. From there, stocks chopped/flopped around, without giving back much ground -- until early September, when they again rallied to break out above those June highs on another upside leg which added an additional 150 points (to 1150).

While history doesn’t repeat itself, it often rhymes. If so, a Dow Theory buy signal will be rendered if the DJ Industrial Average and the D-J Transportation Average (TRAN) can better their respective January 6, 2009, closing highs of 9015.10 and 3717.26. If that happens, it would be termed a new bull market according to my interpretation of Dow Theory. Whether that occurs or not, I think the emerging/frontier markets have already embarked on new bull markets.

As for the recent mantra that buy-and-hold investing is dead: While I questioned this ride-it-out mantra in late 2007, I think the current consensus dissing it has it wrong.

Emphatically, one of the secrets to Warren Buffett’s long-term investment results is embedded in the tax code (i.e. long-term capital gains); and I continue to invest accordingly.