Educational use only. Never intended as advice.

Investment principles.

1. Capital preservation comes first.

2. Markets revert to the mean. Both oversold and overbought markets reverse.

3. For me, the worst time to invest long is when the market is intermediate and short-term ramping.

4. Market dynamics are critical, particularly a) pure price action, b) breadth, c) examination of percentage of stocks overbought or oversold in indexes, d) volatility index behavior

5. Because volatility is cyclical, volatility expansion/contraction can be very helpful with equity and options trading.

6. Volatility bands, combined with measures of cyclical buying (tick) and short-term stochastics can also produce defined risk 'sequence trading'.

7. The hardest part of trading isn't finding an edge, or taking the trade, but relentlessly sticking to the discipline.

8. I'm a great admirer of Jim O'Shaughnessy and his book What Works on Wall Street. I believe that his quantitative work has a great advantage, but it is the exact opposite of the trading side of the equation.

9. For the really big picture, there are some really fantastic strategists, including Jeremy Grantham of GMO, Jeff Saut of Raymond James, John Roque, and Mark Boucher (The Hedge Fund Edge). Dave Landry and Gary Kaltbaum have a great read on the intermediate term.

10. Finally, I think Richard Russell is a must read at www.dowtheoryletters.com It's worth the money.