The primary objective of a formula is to protect you, the investor in a permanent and continuous profit position. It is gauged to produce profits—over a period of time—whatever happens in the market. When stock prices rise, your portfolio shows a profit. When they fall, you step up your purchases at bargain levels. At intermediate points, you can rely on the indications given by the formula 'to continuously strengthen your profit position.
The special feature of the stock market formula method is that it tells you, exactly what to do at all times without attempting a precise prediction of market prices. Implicit in the formula idea is that it is not possible to pinpoint every turn in the market or to gain maximum profits during every market swing. Formulas make no attempt to do this, but are aimed at putting you, in a position to profit to some extent from any market upswing, and to provide some protection during every decline.
Stock market formulas are also designed to inject an element of caution in your investing when caution seems advisable, they reduce the provision for caution when risks seem relatively low, and permit you to benefit from rising prices for common stocks. Moreover, once you incorporate a formula into your investment program, it works more or less automatically, thus allowing you to sleep nights in the knowledge that you are continuously hedging against various possibilities.