PEDRO'S PRIDE.

I watched a young man receive the keys to a brand new Maserati this morning for winning the CNBC Investing Contest. He turned a hypothetical $1,000,000 into $5,015,000 in just a couple of months. Simply fantastic. When asked, however, if he would invest real money that way, he answered, "No." So what the hell did the CNBC contest do for its viewers?

Our Chairman's Challenge, which we wrote about last week, has a purpose and a goal. We want to develop a practical, low-risk, easy-to-use, investment strategy that is virtually certain to make money and outperform the market year-after-year. We want to achieve a strategy that anyone can use. Use with confidence, without the angst of gut-wrenching drawdowns. Now that would be an accomplishment.

Mr. Pedro Rodriques of Cascais, Portugal has taken a major step in this direction. He is the Winner of the Chairman's Challenge with a gain of 382% from January 3, 2003 to March 23, 2006. That's an annualized rate of return of 117.5% per year. It's nowhere near what the kid that won the Maserati produced, but I'd take 117.5% a year anytime. Although Pedro's strategy encountered a max drawdown of 30.36%, it produced a phenomenal 78% winning trades. Money managers would kill for that.

Pedro's entry was very simple. Here's what Pedro did: He bought the 15 top ranked VST stocks, as required, on January 3, 2003 and held them until July 11th, when he sold them. He then bought a new batch of the 15 top VST ranked stocks on August 11th. He held these stocks until July 11, 2004 (or as close to this date as the calendar would allow.) and repeated the process of buying the next batch of stocks on or about August 11th.

Now, I have no idea how or why Mr. Rodriques decided to pick July 11th and August 11th to sell and buy stocks each year. Maybe he goes on vacation during this period and has learned from experience. Maybe he was lucky or maybe he's just a very smart and observant guy. Whatever the case may be, he does appear to have a valid strategy because the market often wilts in the heat of summer. His strategy even survived the brutally bearish summers of 1998, 2000, 2001 and 2002 in that it gained 173% from January 5, 1996 to January 3, 2003. This performance is much better than that achieved by the second and third place winners, but still fell short of the gain of 323% achieved by rebalancing at the beginning of each year.

So would I invest my money using this strategy? I'll answer this question next week. In the meantime, congratulations to Mr. Pedro Rodriques for a simple, innovative and powerful strategy. It is being illustrated as this week's "Strategy of the Week" in text format here in the Views and visually at the VectorVest University. We believe Mr. Rodriques should be very proud of his work and have named it "Pedro's Pride."

P.S. All qualified entrants to the Chairman's Challenge will receive a $50.00 VectorVest Savings Certificate.

P.P.S. All of you "Junk Stock Aficionados" should take a look at SOIGF.