During the tail-end of any strong bull market, we regularly receive a number of emails from subscribers who express their disappointment in our failure to capture all the recent market gains. This displeasure is normal given the present stage of the US markets.

We would like to share some of our strategy with you, for future reference. When there is a ferocious appetite for equities by average investors, such as in the recent nine months, there is almost always a topping pattern forming. Near the final top, investors who cashed out early are not pleased to see their friends, who recently in 2013 got into the market, bragging about their gains.

Did we, at ETF Trade Advisor, cash out too early? Yes, we did. Are we usually able to capture the entire meat of the run? No, we are not. However, did we give folks an average of 17% return on most U.S. equities during some of the toughest times, when others thought we were bold and careless? Yes, we did. Our position has always been as contrarian investors with a long-term view. Unrealized losses are not truly losses until the position is closed. This is also true of unrealized gains; there is no profit until it is in the bank. It has been said that it is easy to be wise after the event has occurred.

Based on our experience and knowledge base, a true bear market is closely approaching for mainstream U.S. equities. With negativity this bad on emerging economies (EEM and EWZ), upside surprises are much more likely for these markets than the other way around. When the violent run eventually occurs in emerging markets, particularly Brazil, it will leave behind the 99% of investors who cashed out early. Those who recognized the absurdity of prices will eventually win, with a handsome profit. Emerging markets and commodities are always the last to catch up with the U.S. market.