Isn't it amazing how much bearishness the market can dish out in such a short span of time? Geez. But, that doesn't mean there's not money to be made in this environment. It just means you have to play the game a little differently.  I didn't come here (ok, I didn't sit down at my desk) to talk about that though.... at least not directly. I've got something more important to pass along - some words of wisdom.  You possibly noticed we stopped doing lesson-oriented newsletters a few weeks ago, opting almost exclusively for trading ideas and updates on our select small cap stocks. So, the fact that I'm temporarily breaking my own new rule should tell you how important I think this is. Later this week we'll resume our trading and small cap focus in the newsletter. In fact, I think I have at least one if not two power-packed editions coming up.  For today though, I think there's something all of us need to chew on ... some hard truths we need to acknowledge when we're in the throes of a bear market.  I'm proud to say I've yet to trip over any of these five ideas this time around; I learned - the hard way - to navigate the pitfalls after getting toasted between 2000 and 2002. Within my 'trader' circle of friends though, I've heard too many of them talking about taking actions that could do more harm than good to their portfolio.  In no particular order, the top five things to remember in an environment like this are...    Five Bear Market Realities You Can't Afford to Forget 1. Valuations mean nothing right now.... even low ones.  I can't tell you the number of times I've heard over the last few months that P/Es are at multi-year lows. Great, but if stocks are so darn cheap, why isn't anybody else buying them? The fact is, cheap stocks can get cheaper.... by continuing to go lower. How far must they go before they hit rock-bottom? Great question. The pundits loved it when the S&P's P/E was 12.0 in the fall of last year, they were crazy about the market when the average P/E was 10.0 a few months ago, and they're hog wild now that we're in the single-digit P/E territory. These same guys were early the first time around, so how do we know stocks are cheap as they're going to get?  2. The talking heads on television don't know any more than you do.  Some say we're at a bottom; other say there's more downside to go. Not all of them can be right if they're in complete disagreement with one another. (Many of these TV personalities were also the same ones pounding the table that stocks were so cheap last October. See the point?)  Just keep in mind they may not have to live, financially, with the consequences they cause in your portfolio. They get paid to put on a great TV show, right or wrong. 3. It (the death spiral for stocks) will eventually end. Yet, next to nobody will recognize it immediately.  This may be a tough one to digest, as it semi-encourages an investor just to stick it out. But at this point, that really may be the best idea ... the time to make an exit if you were going to bail out was a long time ago. In fact, those buy-and-holders may have a slight edge on the market timers. Why? The bulk of any rebound's gains come in the first three months. In fact, on average, if you miss just the first three months of a twelve month recovery move, your returns are more than cut in half. Knowing that can certainly change the way you compare risk and reward. 4. Most stocks (3 out of 4) move in the same direction as the market no matter how great or terrible those stocks are.  This is an extension of rule number one, though it may not seem that way explicitly.  You think you've found the best thing since sliced bread? You may have, but no matter how hot it is, it's not likely to overcome the market's tidal forces... period. 5. No industry is guaranteed to move higher in a bear market... even the defensive ones that always seem to do reasonably well no matter how nasty things get.  If any of you acted on the grand notion that consumer staples, healthcare, and 'sin' stocks were going to hold up just fine just like they always do when things are tough, you'll know the theory isn't reality. Conceptually it all makes sense, but real money isn't something to use to test a theory. The only winning large cap group I found for the last twelve months was educational stocks, and even those are getting trashed now. Mid cap biotech, mid cap retail, small cap home furnishings, and small cap water utilities are the only other winning groups for the last year. Not all of those are surprises, though some are. And, there are a lot of industries that 'should have' made the list but didn't.  The recession-resistant industry theory just isn't consistent enough for me to have blind faith in.    Last Words That's it for now - thanks for indulging me. Like I said above, we'll get back to some money-making ideas and a small cap focus in our upcoming editions. I just thought we'd all be better served by a quick reality check. Who knows... maybe today's the day it will all turn around and make today's newsletter moot. It's a nice thought anyway.   Voyant Intl Corp. Brings in the Heavy Hitters A newly-hired Vice President of sales may seem like a mundane announcement from Voyant Intl Corp. (VOYT), but perhaps there's more to the story than anybody realizes.  Long story made short, Randy Hagin has been named as RocketStream's Senior Vice President of Sales. He's certainly got the right experience, having done the same for Connectix/Microsoft and Aldus/Adobe.  All well and good, but just another employee, right? Maybe. Maybe not. Voyant has sales employees on board, including some dedicated to RocketStream. However, to attract someone who'd been doing the same for Microsoft and Apple? Odds are these guys have a pretty nice network of industry insiders; they know the right people. So no, this really isn't a case of "just another employee". The company did $15K in sales during Q1 of last year, $133K in Q2, and $178 in Q3. No word yet on Q4, but you can see the trend in place. Most of that was attributable to RocketStream. However, they were doing this without a sales hero like Hagin. What kind of growth could RocketStream achieve under Hagin's guidance? That's what's got me curious. The company expects Hagin to generate sales in the millions; I'd expect the same. What wasn't said in the press release, however, was that RocketStream (or any software, for that matter) is a very high-margin product. The bulk of the expense is in its creation; deployment of software is effectively free. But can Voyant actually get sales of RocketStream up to the seven figure level? I think it was headed that direction anyway..... maybe not this year, but soon. The company had already pulled in $326K worth of sales last year even without fourth quarter's numbers. When adding the 'Hagin effect' to the current momentum, I think seven figures - and some outstanding free cash flow - may be a reality before many people realize. I don't know if that will mean a net profit in 2009. If I had to guess, I'd say not. But, it certainly should get them much closer. In the bigger picture, I can still see RocketStream's revenue being a big - and critical - piece of the pie. Not only is it high-margin, it's dependable. There's a lot to be said for the reliable cash flow that stems from a product like RocketStream. It may well keep the company afloat while other projects are put into motion. Point being, this news may be more important than a lot of Voyant investors are initially thinking. Hagin has a history of getting results, which is exactly what Voyant needs from RocketStream. Here's the official Hagin/RocketStream news release.