Everyone loves a rising market. Financial news takes a back seat in the media. Investment statements look better each month. Life is good.

Then reality sets in.

Markets return to "normal" and begin to fluctuate. CNBC kicks into a higher gear, looking for answers from every expert they can find. More unsettling is when one declares, "Markets have peaked. It's time to sell" while another states, "Things are better than we thought. It's time to buy, buy, buy!"

We endured such a phase during the spring this year, and we're experiencing it again today. The divergent messages can be confusing, frustrating and worrisome.

A couple of years ago our Team changed our entire investment process, because we believed we had found a better way to invest. Rather than getting caught up in the noise of "today in the markets," we chose to migrate toward an investment model based on "relative strength."

It's not predictive research. It's a structured process that ranks financial securities, and recommends changes, based on which ones are faring best versus their peers. Simply put: we want to own companies that are going up faster than their peers. Our back testing shows that choosing stocks with the highest relative strength helps portfolios significantly outperform over time.

At the end of the day of course, we are still investing in the equity markets. If the overall market declines 10%, a similar drop in the stock portion of our portfolios would not be surprising. For this reason, we include more conservative investments in most of our portfolios to provide a balance or a cushion.

We can’t know ahead of time when markets will correct. But even when markets are going down, we want to hold what we believe are the strongest companies at that time. Our research shows those companies ranking highest in relative strength tend to rebound faster and stronger when markets eventually improve.

Markets have corrected by at least 5% on 11 occasions since March 2009, the last market bottom. Most declines are smaller, and their downward movements are not sufficient to trigger a recommendation to move out of equities. However, there have been two occasions since January 2008 when our relative strength research recommended a complete move out of equities: July 2008 and August 2011. At those junctures, significant amounts of money were leaving the markets and a move to cash was recommended.

None of our indicators suggest moving out of equities now. Even though markets are down over the last couple of months, the relative strength research continues to recommend equities as the top asset class.

Our portfolios and our process have evolved over the last few years and will continue to evolve. We obviously still watch markets every day and we constantly seek other investments, or strategies, that can enhance or improve our process further.

We believe our investment process works better than any other strategy we’ve come across in 20+ years in the business. With this knowledge, we look forward to the next few years!