In my past communications, I have indicated that the market should rally in September/October and sustain 11,800 on the DOW in order for the bull market to stay alive.  A rally did happen, but it failed to reach where I thought it needed to reach.  So, this is Strike Two against the bull market.  What kind of bear market are we headed for, or are we in – one such as 2001-2003, or 2008?  My view is that it all depends on deflation vs. inflation, and it is too early to tell.  If inflation remains, my view would lean to a 2001-2003 style recession and bear market.  Deflation, which usually means credit defaults, would indicate something more significant.  I will reiterate that buy and hold mentalities do not work in this environment.  At IAP we took significant risk out of portfolios in June.  We are monitoring the European debt situation very closely for signs of default.  2008 really kicked in when Lehman went bankrupt.  If this type of activity resumes, my opinion is that it could come from Europe this time.  I will start to discuss Strike Three when I see how low this correction goes.  Right now my technical intuition feels we could see DOW 9800 – 10200 on this move, followed by yet another rally attempt to end the year.  If that rally doesn’t do much, that would indicate that 2012 will be a very challenging year for investment results.  The key to maintaining wealth is working with advisors who learned something from the past decade and who have a better understanding of risk management.  I was taught by major Wall Street firms that if the market is down 22% and I am down 21%, then I am doing a good job.  I no longer hold to this Wall Street view.  It’s not what you make in bull markets (even though you need to invest for them); it’s how you navigate through bear markets that counts!   The days of investing in equity mutual funds are over.  Understand that if you are a manager of a large cap equity fund and believe the market has a lot of risk, then, by prospectus, you are required to take risk.  Learn from the past decade; learn from history.  Our investment climate is changing.   I personally will be looking for investment opportunities over the next few weeks, but first we need to see how low this current correction goes.