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Great Moments in Fabian History, April 2011

04/13/2011

Last week, we told you that April is a special month for the Fabian family, as this is the month that our flagship publication, Successful Investing, came into existence. This year, we celebrate our 34th anniversary of helping investors to protect their serious money, while achieving market-beating returns.

One way we’ve done that is by adhering to advice from my father, Dick Fabian, about following the trends in the market. Dick always would instruct investors to look at what the market actually was doing, and not what they thought the market might do -- or what they wanted the market to do. That’s why he developed the trend-following strategy that remains at the crux of our investment system today.

Dick knew that if you could be in the market when the trend was decidedly higher, and then out of the market when stocks were declining, you would preserve principal and grow your capital regardless of market conditions.

This philosophy has born many a great call, and to give you a little sense of how good these calls have been, I’d like to share with you a short list of what my family calls --great moments in Fabian history.

September 1976: Dick Fabian self-publishes the book, “How to Be Your Own Investment Counselor.” This was the first (and, in my opinion, still the best) primer on the trend-following approach that formed the basis for the current Fabian Plan. After experiencing the devastating bear market of 1973-74, Dick knew that investors needed a better way to manage their serious money. Dick demonstrated that with a simple, easy-to-understand plan for beating the markets, investors really could build serious wealth with only minimal time and effort expended on their investments.

April 1977: Motivated by the overwhelmingly positive response to his book, Dick teamed up with his wife, Marie Fabian, to launch the Telephone Switch Newsletter right from their dining room table. The basic purpose of the newsletter was to report and to monitor the results of the buy and sell signals generated by the plan laid out in his book. In his original newsletter, Dick included funds such as Fidelity Magellan and 44 Wall Street. He reported on the prices of these funds and the major market indices for the previous 39 weeks. He also produced charts of these indices by hand.

September 1979: Doug Fabian joins the newsletter as a mutual fund analyst.

July 1981: The Telephone Switch Newsletter issued a bear-market sell signal. The sell followed subscriber profits of 40% during the preceding 14-month buy cycle. The bear market that followed registered a drop of 27% in the Dow Industrials. This plunge was the first bear market that Fabian subscribers would avoid. At that time, money funds were paying a whopping 18% annually — accompanied by a nationwide inflation rate of 20%.

September 1982: Dick issued a new bull market buy call that generated returns of 45% in the next 15 months.

June 1985: A buy signal was issued for the newly created International Plan. This buy signal lasted more than two years and produced gains in excess of 140% in international funds. At that time, the U.S. dollar was in a major bear market that provided a strong tailwind to international investments. This uptrend in international markets ended with the 1987 stock market crash.

October 1987: A sell signal on Oct. 15 warned subscribers to move into the safety of the money funds. Four days later, the market experienced its biggest, single-day decline ever. Fabian followers walked away with gains of 23% in calendar year 1987. The Telephone Switch Newsletter was one of five publications to have predicted the decline, according to news reports of The Wall Street Journal. Of course, we did not predict anything. We simply stuck to our disciplined investment approach and followed the rules of the Fabian Plan.

August 1990: The Fabian Plan issued a new sell signal, as Kuwait was invaded by neighboring Iraq. This geopolitical event instigated a global stock market bear that would end only after an American-led coalition of 80 countries booted Saddam Hussein out of Kuwait. We were only out of the market for three months before issuing a new buy signal that led to a 34% gain during the next 18 months.

January 1995: After a year in which the Federal Reserve raised interest rates four times and when most economists were predicting a recession, the Fabian Plan identified a new uptrend that kicked off a bull market run in the late 1990s. During the next five years, the Fabian Plan produced annual gains of more than 20%, led by the technology stock boom and the proliferation of more than 10,000 mutual funds.

April 2000: The Fabian Plan issued a new sell signal for stocks as the NASDAQ market began to fall. A decline of more then 70% ensued during the next three years.

January 4, 2008: The Fabian Plan 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. While most investors tossed and turned at night, subscribers to this service slept like babies.

The big takeaway here from this stroll down memory lane is that the Fabian Plan isn’t some here-today, gone-tomorrow gimmick. The Fabian Plan has worked for longer than many stock brokers out there have been alive. And, with a strong adherence to tradition and a constant attempt to learn from the past, we are going to continue making great calls for another three decades.

From our family to yours, happy anniversary!

If you’d like to find out how you can become part of the Fabian family of advisory services, I invite you to check out our flagship service, Successful Investing, today.

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