Lots To Look At I hope everyone enjoyed some time off from trading to take a holiday break. But, if we're going to finish the year strong, it's time to get back to work. I want to make a bigger-picture point today, but I'll also be giving you a preview of what's in store next week.  In the meantime, I'll direct your attention to the blog where I've been pretty busy of late. Some of those entries are in the sidebar to the right. For the rest, just click here to go straight to the blog page.  Now, about today's macro-view of things, I'll just preface it like this.... I don't mean to sound alarmist. I'm just trying to be realistic, so I know how to proceed. Don't read anything more into it.    What's In a Name? For the better part of the last three months we've been trying to figure out (1) what a market bottom looks like, and (2) if we've actually made a bottom yet. I think it's an important exercise, even if we can all agree that nobody truly knows when the precise bottom is made until well after the fact. My personal thoughts are that we're closer to the bottom of this cyclical bear market than not - or maybe we've already hit the bottom for this cyclical bear and are now in the recovery phase (an idea I've documented a few times recently). However, I also think it's critical to distinguish the difference between a cyclical bear market and a secular bear market. A cyclical bear market can last several months - or even a year - as we've experienced in 2008. A secular bear market can - and usually does - last more than a decade. More important to us right now is the reality that we can experience several cyclical bear markets within one secular bear market. That's no big deal, except for one thing.... it completely negates the logic of a 'buy and hold' approach. You heard that right - 'buy and hold' only works when it works. When it doesn't work, it doesn't. (Brilliant, huh? But it's an important point to make all the same.) Don't get me wrong - If you want to buy a long-term holding or an index fund and just sit on it for 20 years because that's the way your broker told you to do it, be my guest. Just be aware that the market is pretty much flat for the last 10 years.  None of this is a big deal for someone who's 35 years old and nowhere near retirement - they've got time to catch up. However, go talk to someone who turned 65 this year and poured all kinds of money into retirement funds over the last 10 years. He or she can tell you quite a bit about about the flaw of the buy-and-hold approach. So how come we know so little about secular bear markets? I think there are two inter-related reasons.  The first reason is simply that they're very rare - we've only seen three in modern history, not counting the current one. The second reason is that the bulk of the popular investing books and portfolio theories were written between 1980 and 2000, when we were in the middle of a raging secular bull market. Of course buy-and-hold worked then... everything was on the rise. Perhaps too many people mistook luck and a rising tide with a market-beating strategy. Since there's very little out there on the matter, today I just wanted to introduce you to the possibility that the next several years - even if bullish - may well just be part of a macro-sideways trend. (Most secular bears are actually just sideways markets, rather than net losers.) One thing I want to stress ... THIS IS NOT A REASON TO ABANDON THE STOCK MARKET! I'm always hesitant to even bring up ideas like these because, invariably, someone will take it to the extreme. That's not my intent. Of all the arenas in which I can make my money work for me, I still think equities are the best way... despite my belief that we're in a secular bear market. The only thing the secular bear trend does to my stock-picking strategy is prompt me to not get married to any particular stock. So please, don't read more into it than just that. Anyway, if you're looking for stats and charts, here you go... The average secular bear market lasts 14 years. A less-detailed version of the Dow's secular bear markets appears nearby. For a full-screen chart, click here. It's just something to think about - and factor in - when it comes to long-term planning. It's nothing to dwell on day-to-day though.    Next Week Markets are closed on Thursday of the coming week in observance of New Year's Day. Before we turn the calendar though, we've got two more items to take care of .... a review of 2008, and an outlook for 2009. I'm still not sure which one will be coming first, but it's my plan to get them both done before Thursday. Be sure to check 'em out.  In the meantime, enjoy the rest of your holiday weekend.   Credit Market Is Actually Warming Up, More Lending Activity on the Way The Fed's decision to lower interest rates last week has indeed fostered a little more willingness to lend. It's still not great, but it's better than it was.  My basis for the assessment lies in the TED spread. The TED spread is as low as it's been in months, after peaking at record-breaking levels in October when the credit market was frozen solid.  (What exactly is the TED spread, and why does it matter? We explained it on full detail in early October. Click here to review that explanation.) As of right now, the TED spread's reading is 1.44. For perspective, that's almost back to the 1.1 level we saw before the lending market fell apart, and it's well under the October peak of 4.63.  Here's the chart.        More Madoff Madness... Funny-But-True Quotes As George Castanza would say about the Bernie Madoff fiasco, "This thing is like an onion - the more layers you peel, the more it stinks!" We got another round of news regarding the scandal this past week, and it stinks even more than it did before.  I'm not going to rehash that here though... I'm more interested in some of the remarks about the latest batch of investigations. Some of them are funny, even if they don't mean to be. Here are a couple of my favorites.... Felix Salmon of Conde Nast's Portfolio.com stated about the resulting confidence crisis... "if you're an investor, yes, you should be worried about losing your money to fraud - but you should also be even more worried about losing it the old-fashioned way, by investing it with a hedge fund manager who blows up spectacularly." Comparing the SEC's complete failure to a Keystone Cops shtick, Greg Newton rebutted: "characterizing the SEC as The Keystone Cops does defamatory disservice to The Keystone Cops' investigative skills." Those were the only two I found that were appropriately bitter but also funny. As more of these jaded quips arise though, I'll be sure to post them here.