One of the reasons I am an opponent to traditional buy and hold investing is that lack of consideration of the business cycle. The history of capitalism is full of growth periods followed by contractions with the average cycle lasting four years.

If you want to beat the market let the business cycle guide your buys and sells.

We all know consumers are mired in deep recession. Budgetary constraints and income challenges have resulted in lower expenditures. There simply is no room for discretionary spending.

One discretionary item being cut from budgets is cosmetic spending. Women are making that eye liner and facial cream last longer or they are cutting out the use completely. They are going all natural.

Cosmetic companies, including Bare Escentuals (BARE), have been suffering since the recession began in late 2007. A quick glance of BARE’s chart since late 2007 shows how this company has performed during the downturn.

In the depths of recession BARE trades for less than $3 per share, until today that is. At a time when the market is expecting a never ending malaise and possible bankruptcy for BARE, the company delivered results that show there may be a light at the end of the tunnel.

BARE stated that it made $24 million in the fourth quarter or $.26 per share. More importantly sales had increased by 2% to $147 million as compared to the same period in 2007.

Investors reacted by sending shares up more than 20% today.

The time to buy is when a new business cycle emerges. The time to sell is when an existing cycle ends. It really is that simple.

Even with the gains today, BARE trades for only a fraction of its peak. Looking forward, we know that eventually this recession will end. Given BARE’s performance in the fourth quarter, I suspect this company will thrive once consumer spending goes beyond the necessities.

This article was written by Jamie Dlugosch, contributor to InvestorPlace Media. For more actionable insights likes this, visit www.InvestorPlace.com.