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We are, to say the least, extremely pleased with our 2001 performance. In the throes of a brutal bear market, we outperformed a passive buy & hold strategy by an impressive 16.46%. Even a 50% cash position did not defend you as well as the BCN advantage service. We must admit, upfront, that the events of September 11th skewed the numbers more than little. Our clients were fortunate to be in cash prior to acts that no one could predict. Yet to our credit, the June 15th alert had already proved correct several weeks prior to that day. Here are 2 observations about the year we’ve just weathered: The value of experience – or more specifically, the importance of learning from your mistakes – cannot be overestimated. After nearly 2 decades of analyzing the stock market, the most important lesson I’ve learned is simply this: When it comes to investing, do what makes you feel the most uncomfortable. If we’re going to let our emotions guide us – then be contrarian – and do exactly the opposite of what they tell us to do. It’s an incredibly difficult lesson to learn – and apply. In the 5 years that we’ve offered the BCN Advantage service to our clients, we’ve only failed to heed this lesson once, and the result was our 9/8/2000 decision not to exit the market. With experience, you CAN sift though the mountains of information, read and trust your indicators, and set aside the conflicting emotions when the time comes to act. The value of active management – or more specifically, the importance of the BCN Advantage service – is just beginning to be appreciated. Counting the dollars is easy: For a client who had $100,000 invested last year, our service paid for itself for the next 30 years. Counting the intangibles is more difficult – but just as important: A change in investment philosophy is underway, and you’re far ahead of the crowd. Active management will become as predominate in the 21st century as passive buy & hold was in the last. And the change springs from the power of information. When “modern” portfolio theory was developed in the 1950s, only the major brokerage houses and Wall Street bankers had access to objective, accurate, timely information. In the absence of such information, it is impossible to make informed investment decisions. The only defense is to make NO decision – which, when you think about it – is really what passive buy & hold investing became. What’s changed (as recently as the last 10 years) and with implications just beginning to become clear – is the quality and speed of the available information. And like any other area of human endeavor, investing is no different: Information is key – and those who devote themselves to understanding that information gain substantial advantage.