Buy and hold has been the mantra of the market for years. Stick it out and youll weather any downturns, it is said. Over the long term, stocks outperform bonds and cash.

True enough, over the span of decades stocks do quite well. Most of us, though, dont have decades to solidify our retirement nest egg. Sadly, many investors lost half or more of their nest eggs by adhering to the buy and hold strategy in 2000-01 and have yet to fully recover. They need to preserve the assets that remain and begin gaining ground.

You must first understand the nature of the markets cycles. Savvy investing as the cycles come and go is the underpinning of our retirement funds management plan. For our money, its the only way to return ravaged portfolios to good health.

At the end of the go-go decade for stocks in the 1990s we shifted into a bear market cycle. But all bear markets are not alike. Were convinced that stocks are in the early stages of a long-term secular bear market.

Secular trends last 5-20 years with the average length 14 years. As long as each successive market high and market low is higher than the previous one, we are in a secular bull market. Lower highs followed by lower lows signals a secular bear market.

In the past 200 years, there have been 14 secular trends in the US market, seven bull and seven bear. The bear that followed the 1929 market crash lasted a record 20 years. The latest secular bull began in December 1982 and­as we see it--ended in March 2000. Only two 20-year bull markets in the 19th century exceeded that 18-year run.

Secular trends are punctuated by periodic short-term cyclical reversals that can last many weeks or months and can move the market hundreds or thousands of points. The cyclical move eventually runs out of steam, however, and the market returns to the dominant trend.

Look at Japan. For two decades the secular bull market in the Nikkei couldnt be stopped, and the index tripled in value in the last half of the 1980s. Then the market entered a 12-year secular bear, dropping from near 40,000 to under 10,000. But heres a key point: There were six rallies of 20%-60% in Japan in the midst of an overall 70% decline.

During the last secular bull market in the US there were two cyclical bears, one that concluded with the market crash in October 1987, and another in 1990-91. Each time the market regained its footing and roared to new highs.

A buy-and-hold approach works well in a secular bull market but is a dud during a secular bear. The total annual return in the 1982-2000 bull run was in double digits. But in the last secular bear, 1966-82, the annual real return was a NEGATIVE 1.5%. Tossing your dough into a simple passbook account would have outperformed stocks during that period.

So it is critically important to recognize whether the market is in a secular or cyclical cycle and to adjust your investing strategy accordingly. When the bear is gripping Wall Street well spend much of our time in cash or bonds but prepared to jump into stocks during a cyclical rally and jump out when it fizzles. During the next big bull stampede well be aggressively in stocks most of the time but head to the sidelines during the occasional cyclical correction.

Mutual funds and Exchange Traded Funds are ideal for this style of investing because of their diversification, flexibility and liquidity. Our goal is to grow our nest egg, preserve what we have in the tough times, and start growing again when the market permits. Along the way, well sleep much better than the buy-and-hold crowd.