Come in closer, I'm going to teach you this one weird trick to beat the market. The one weird trick that even people who I think are some of the best value investors in the world overlook, even though Benjamin Graham clearly explained it in "The Intelligent Investor". The trick even the most devout Warren Buffett followers overlook. Hold some bonds. Always. In my own portfolio, I never have less than 20% of all of my money in fixed income. I'll tell you why. Dividends and interest payments motivate the markets more than any other factor. If you think it's anything else, you are wrong, plain as that. It's not technical analysis, it's not the government, it's not inflation. It's how much the investment is paying you in cold, hard cash at the end of the day, and what you're risking in principal to get it. Value investors are trained to spot future cash flows from business opportunities, and they know how to buy them at a discount. But I can't believe the huge percentage of those investors who overlook simple, current payments. And they matter, because what value investors know is that the stock market behaves irrationally, but they forget that so does the bond market. When stocks are crashing, bonds stay high, because people continue to act irrationally. You should never expect both to act rationally at the same time. Anticipate that behavior and profit from it. This is how I made huge returns in 2008-2009. I had a bunch of money in bonds just waiting to go, and when the stock market got hit, I started buying like crazy. So it's not the interest rates that you're buying to receive, it's the buying power that having that cash available gives you. Yes, of course, you can also hold plain old cash, but I like bonds better. If you are expecting a market pullback in 2006, you better be holding something in backup. My vehicle of choice for this is the Vanguard Total Bond Market ETF (BND). It holds a diverse mix of high credit rating bonds, and the management costs are very low. My portfolio strategy is simple: If what I hold in bonds goes up OR down 5%, I buy or sell what needs to be moved to bring that percentage into balance. It's how I made 400% in 2008, and it's how I've continued to make lots more since then. Always keep your powder dry. What you might lose to inflation is totally worth the leverage you gain in a depressed stock market.