If you are one of those folks “in for the long haul” I hope you have plenty of years because there are no more bulls in the pasture. The herd has been led to the packing house.

Hope and fear will now dominate for the next several years. Before It was hope and greed. Yes, I said years as this bear market has a long, long way to go. It will not surprise me to see the DOW now at 12,000 trade around 6,000 in about 5 years. This is a young bear who will grow and mature by eating almost every stock.

What can you do with your 401K or other tax sheltered retirement plan? Immediately transfer all funds to a money market account. Sure you won’t make much, but you won’t lose it.

The broker will try to talk you out of selling. The fund manager will also be very unhappy. Accounts in money markets do not make any residual payments for them. Most investors who own mutual funds do not realize there are hidden fees that amount to about 2% every year.

Mutual fund managers are paid by the amount of money in the portfolio and not on the performance of the fund. Even when investors are losing money month after month they remain fat cats.

Brokers will tell the usual story that this is a great “opportunity” to buy XYZ company at this price. Don’t believe it. “This is a good company and it pays a large dividend.” Really? From 2000 to 2003 the S&P500 Index lost 40%. Would the dividends you might receive make up for such a huge loss? You can answer that one.

History shows that during any 10-year period there has always been a market decline of 20% to 40% and sometimes more. Index funds are not a safe haven and 80% of mutual funds do not perform as well as a major index. Every index fund lost money during that 3 year period and many have not yet recovered. Cash is king.

Recently there has been a new financial instrument created. It is an ETF – Exchange Traded Fund. It is similar to a mutual fund, but the expense ratio is about 1/10 that of regular mutual funds and it can be bought and sold during trading hours. Brokers also allow stop loss orders to be placed.

And here is the kicker. There are bear ETFs. These are shares that go up when the stock market goes down. There are hundreds of them that take in the entire market including specialized sectors. These can be found simply by a Google search using the words “bear ETF”.

Take the time to study these as this is a way you can use these inverse funds to profit in a bear market.

The bear is eating all stocks, even the “good” ones. Don’t let him eat yours.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2006 All rights reserved.

Copyright 2008 Albert W. Thomas All rights reserved. Author of "IF IT DOESN'T GO UP, DON'T BUY IT!"