This is so important to understand: you cannot gamble, like flipping coins, where the odds are 50:50. That's because if you win +50 pct and then lose "50 pct, then win +50 pct, then lose "50 pct, etc, in just a few iterations, you end up with very little capital left.

So the objective is to win more times than you lose, and to win a bigger pct than the pct of your average loss. This is so basic to effective trading. It's why I appear to be a perma-bear (even though I'm not).

You see, I have to always be more careful not to lose capital, than I can afford to be optimistic on the bull side, in trying to win it.

I have been concerned that there are risks in the capital market that are being ignored by too many traders. I feel that when certain realities hit home, there will be further weakness in those equity markets that are sidetracking (the U.S., for instance), and there will be a pullback in those markets that have been flying high (Japan, Russia, India, for instance).

During these times, I know that portfolio managers like to load up on the consumer staples sector, such as the alcohol and tobacco stocks, the drugstores and food stores, etc, because these are staples in our lives that we are going to continue to spend money on, in good times and bad. These are companies that are called cash cows: they operate on small margins typically, but even in recessions their cash registers continue to ring each day.

So while, the consumer staple stocks are typically not too exciting in the great bull markets, they are comfort food for portfolio managers in the bear markets where those same managers cannot (or at least do not) go 100 pct to cash.

When you see the consumer staples sector index fund (XLP) outperforming the broad market indexes like the Dow 30 index, as it has been for a few days as shown by the following chart, then you know that the equity market is weak.