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A Plan to Save Your Skin

04/20/2011

This week, we continue to celebrate the anniversary month of our flagship publication, Successful Investing. This April marks our 34th year of helping investors protect their serious money while achieving market-beating returns.

One way we’ve done that is by adhering to the advice of my father, Dick Fabian, on following the trends in the market. Dick’s simple, yet brilliant, thesis was that if he could find a way to tell you when to move your money into stocks when things started to get good, and out of stocks when they started to get bad, you would preserve principal and grow your capital regardless of market conditions.

The program we developed, known as the Fabian Plan, did just that, and to this day, the essence of that trend-following plan remains in place to help us make winning investment calls. And perhaps our biggest winning calls over the years were the ones we made that saved our skin, and kept us out of harm’s way when the going got really tough. Two such calls we made really show the power of the Fabian Plan, and why we think every investor should adhere to its tenants.

On October 15, 1987, the Fabian Plan issued a sell signal that instructed subscribers to move into the safety of cash. Four days later, the market experienced its biggest, single-day decline ever. Fabian followers walked away with gains of 23% in calendar year 1987. Our newsletter, then called the Telephone Switch Newsletter, was one of five publications to have predicted the decline, according to news reports in The Wall Street Journal. Of course, we didn’t actually predict anything. We simply stuck to our disciplined investment approach and followed the rules of the Fabian Plan.

The next big example of the Fabian Plan keeping investors out of harm’s way occurred on January 4, 2008, when we issued a new sell signal for stocks well before the bear market selling of 2008 intensified. This call put subscribers into the safety and security of the money market, and while most investors tossed and turned at night watching their assets become victims of the Great Recession, our subscribers slept through the night like babies.

These are just two examples of some of the great calls that the Fabian Plan has made over the past three-plus decades and, with our feet firmly planted in proven soil, we’ll continue making great calls for years and years to come.

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