I got a call several weeks ago from a long-term VectorVest subscriber asking if I would be willing to make a "Retirement Strategy" presentation at the facility where he lives in Sarasota, FL. He said it was the most wonderful place he has ever lived and all of the residents were very well to do. Nevertheless, he was so pleased with his experience with VectorVest that he wanted them to learn how they, too, could benefit from its use. After some discussion, I agreed to make a presentation and put together a talk entitled, "How to Make Substantial Income While Living a Life of Leisure."

The whole idea was to illustrate how VectorVest could, in a few hours a week, help Prudent Investors generate significant current income, at least 10 %/yr., and capital appreciation, 10 %/yr., with relatively low risk. I referred to my "Retirement Essays and Strategies" as the basis for the presentation. Mr. Dan Misch, VectorVest Instructor and Product Consultant, and I gave the talk last Monday, April 19th.

I thought the presentation was well received and several very interesting questions were asked. Several attendees asked if we managed money using VectorVest. The answer was yes and no. Yes, we use it for our own accounts and for the company's accounts. No, we do not manage money for others. One gentleman asked if we would teach his daughter how to invest with VectorVest. Our answer was yes, of course, that's what we do.

This whole experience got me thinking. Here I was, a dirt-poor, first generation American, making a presentation on investing to a group of rich guys. How could this happen? I went to college and gained the knowledge I needed to figure out how to make money in the stock market. I graduated with degrees in Chemical Engineering, but it was the math and modeling skills that allowed me to create VectorVest. Had I remained an engineer, I probably would be scrimping and scraping to live the lifestyle I desired, even though I rose to a high executive position. It was the stock market that put real money into my pocket and I was so lucky to learn how to make money that way.

Yes, we will teach your daughter, son, nieces, nephews and grandchildren how to make money in stocks. Think about it. If you get them to invest with VectorVest, you will be doing them The Biggest Favor.

SYNTHETIC LONG STOCK POSITIONS.
Dan and I met with the Sarasota User Group on Monday evening, and it was great fun. I spoke about Retirement Strategies and Dan gave a presentation on VectorVest RealTime. I ended my talk by advocating the use of Covered Calls to lower risk and generate extra income from optionable dividend paying stocks when a gentleman asked me what my favorite option trade was? I said it was to buy Calls and sell Puts to create synthetic long stock positions on high priced stocks such as BIDU, GOOG and AAPL. I used AAPL to illustrate what I meant.

Apple had closed at $247.07/share on Monday, so it would cost me $24,707 plus commissions to buy 100 shares of stock at that price. The Options Pricing Model said that it would cost me $8.23/share or $823.00 plus commissions to buy one AUG 250 Call Option Contract, which controls 100 shares of stock. So I had a choice. I could spend $24,707 to own 100 shares of Apple stock or I could spend $823.00 to buy one AAPL Aug 250 Call Contract. Well, I knew that I would make money if AAPL's price went up, but AAPL's price would have to be at least $258.23/share by the August Expiration date just for me to break even. I didn't like that, so I said I would sell one AAPL Aug 250 Put Contract for $11.03/share or $1,103 less commissions to offset the cost of the Call Contract. In fact, I would more than offset the cost of the Calls, I'd be about $280 to the good. So what's wrong with this picture?

By selling the Puts, I'd be incurring $25,000 worth of downside risk. But I was buying the Calls because AAPL was on a roll and I think I have enough sense to get out of the position if it went against me. Just in case you didn't know it, AAPL released sensational earnings after the close on Tuesday and the stock is now trading at $271 per share. The July 250 Call is trading at $27.80 per share and the July 250 Put is trading at $6.30 per share. (There are no Aug Contracts.) Nevertheless, you'd be up about $2,400 or about 10% on 100 shares of stock or up about $2,430 on your option trade in which you had a net credit. That's why I like Synthetic Long Stock Positions.

THE CAROLINA COCKTAIL.
The questions started coming fast and furious when Dan Misch spoke about the VectorVest RealTime Derby last Monday night. It is such a fantastic tool and we want you to benefit from it, even if you can't trade during the day. So we have been listing the top five 5-Day Derby Winners in the "Strategy" Section of the Views each day because these Strategies have been performing the best. Logically, one would think they're good Strategies to use to look for hot stocks. If you did nothing more than run the Strategies in UniSearch and cherry-picked stocks from the graphs, you'd find a ton of great winners. I specifically remember talking about the beautiful graph for ROHI we found Monday night with Timsons Tigers. The stock closed at $1.80 on 04/19. It's at $3.45, up 91.7% in four days, as I write this.

Man, if you don't like looking at graphs; then learn how to create killer searches. Here's an idea for you. Build a WatchList of the top 10 stocks found by the five 5-Day Winners listed every Friday. Then sort the WatchList by VST/Actual Price. I call this The Carolina Cocktail. The performance of the top ten stocks in these WatchLists since February 12th has been amazing. If you want to see how to make a Carolina Cocktail, join Mr. David Thornton, Director of Sales and Marketing, at the VectorVest University to see this week's celebratory "Strategy of the Week" presentation: "The Carolina Cocktail."

On February 13, 2009, I wrote an essay called, "Another Day at the Races." I had developed a technique of buying or shorting fast moving stocks in fast moving strategies, so I detailed how I tracked the performance of nine strategies, five bullish and four bearish, from the market's Open at 9:30 AM to its Close at 4:00 PM. In my mind, it was like going to a racetrack and watching the horses run. It was great fun and often quite profitable, so we created the VectorVest RealTime Derby.

The VectorVest RealTime Derby tracks and displays the performance of over 175 VectorVest Strategies from the time the market opens to the time it closes. With this tool, I could easily see which strategies or stocks I wanted to trade on any given day. Not only that, but I could see internal market action like never before. Take today, for example: I could easily see that the opening rally of the major indexes wasn't going to last because the Derby showed Bearish strategies out-performing Bullish strategies. Sure enough, the major indexes turned lower shortly after 10:00 AM.

With the Derby providing a tremendous amount of valuable data each day, we now needed a way of storing and analyzing it. So our developers created the Tote Board. We are very proud to announce that the Tote Board is being released today to all VectorVest RealTime Derby Users at no extra charge.

Like the Tote Board at your favorite track, the VectorVest RealTime Tote Board stores the daily Derby results and provides useful statistical information on performance. Over a time period of your choice, it shows the total gain or loss of every strategy, the percentages of the winning days and trades, and the maximum draw down. This information makes it extremely easy, of course, to see which strategies have been the best or worst performers over the time period you selected.

As I look at the Tote Board right now, 2:32 PM, the best performing strategy over the last five days is Odd Fellows Short with a gain of 8.57%. It's made money in four of the last five days, which is tops for any strategy, and it's had 68% winning trades, which is second best. It also was listed as a Top-Five Performer in Tuesday's Color Guard, and it's already up 4.1% today. Should I go short with this strategy? I just might do that. Thanks guys for The Derby and The Tote Board.

PROTECTING PROFITS.
The Price of the VectorVest Composite has gone up 61.4% from the March 9th low to yesterday's close. If you have been fortunate enough to participate in this rally, you should realize it's not going to last forever. Even if you may not wish to sell any stocks right now, you should learn how to protect profits. Mr. Steve Chappell, our Director of Educational Services, will share his knowledge and experience in how to perform this delicate task. So join Mr. Chappell at the VectorVest University to see this week's "Strategy of the Week" presentation: "Protecting Profits."

We went long in the YBR portfolio yesterday with selections from the "Explosive GRT & EPS Stocks" Strategy. The VectorVest RealTime Derby made the decision to pick this strategy as simple as pie.

The "Explosive GRT & EPS Stocks" portfolio clearly had the highest performance rating of the strategies recommended in Wednesday night's Views. We calculate a portfolio's performance rating by multiplying the percent winners times the percent gain. Since the RealTime Derby calculates the percent winners and the percent gain on a tick by tick basis and delivers the results on a second per second basis, we were able to make our decision quickly and easily.

If you are not using VectorVest RealTime, you can obtain a close approximation of a portfolio's real-time performance by using our Portfolio Tracker, which is free. Another option would be to use Yahoo!Finance. In this case you'd have to manually build a WatchList of the stocks from each strategy and check them when the major indexes all gain more than 1%. This event happened yesterday at 10:09 AM, so we jumped in.

Now we are faced with the task of managing the portfolio. You may recall that the original exit strategy for a long YBR portfolio was to sell any stock that had achieved a 50% gain or a 30% loss. Stocks that were sold from the portfolio were not replaced. In real life, I found that I could not handle using a 30% Stop, so I began to use tighter Stops. I finally settled on using Stops that were 10% below the higher of the purchase price or the highest closing price attained thereafter. This seemed to work quite well, but I don't know if it gave the best results as far as risk vs. reward goes.

Even though I did some investigative work on this issue, I asked Mr. Glenn Tompkins to look into it more thoroughly. My ultimate goal is to get the maximum profit at the minimum risk. I'm sure that Mr. Tompkins will be able to help me find the sweet spot in Managing the Yellow Brick Road Portfolio.

OK, OK, we went long yesterday even after talking about planning for a downturn four weeks ago and preparing to go short just last Friday. So what happened?

As Bernie Lo, the affable host of Bloomberg's Asia Confidential TV show, said the other day, "The market looked like it was going to hell hand over fist just a couple of days ago, and now everything is going up." Yup, I was there watching Bernie last Sunday night and everything was going, uh down. Asian markets were crashing and U.S. Futures were down, big time. His guests were bearish and even some of Bloomberg's experts were expressing fears of a serious downturn. But it hasn't happened so far. Why?

U.S. Futures were still going down early Monday morning when a guest on CNBC's Squawk Box Show, Ms. Meredith Whitney, America's leading bank analyst, issued a Buy recommendation on Goldman Sachs and said nice things about banks in general. U.S. Stock Futures prices immediately took off and the Mighty Dow soared 185.16 points for its single biggest gain in a month. Of course, I watched this in utter amazement, and didn't go short in the Yellow Brick Road (YBR) portfolio as I had prepared to.

Trading was wishy-washy on Tuesday, so I thought the "Whitney" rally was over, and it was. But stock prices did rise modestly on Tuesday and the Primary Wave went from Dn to Up. So we advised Prudent Investors to get their shopping lists ready, Aggressive Investors and Traders to play the market up or down as it developed, and we decided to wait for a DnDn situation to reappear before considering going short in the YBR portfolio. Tuesday was clearly an inflection day and I needed to see whether the bulls or the bears were going to prevail on Wednesday.

There was only one problem. Tuesday's business wasn't quite completed at 4:00PM. After the market had closed, Intel reported stronger than expected revenue and profit margins for the second quarter and its CEO, Mr. Paul Otellini, presented a bullish outlook for the rest of the year. INTC jumped $1.19 per share and U.S. Stock Futures soared.

The market gapped higher at Wednesday's open and I couldn't do anything in the Model Portfolio but close my positions as soon as I could. That, however, doesn't mean you couldn't have made some very good trades. On Tuesday evening, Mr. Don Thornton, one of our bright, young Product Support Specialists, gave an excellent analysis of Tuesday's market action in his Daily Color Guard Report and he observed that all five of the top performing Strategies were Bottom Fishing, low RT, strategies. He also noted that three of the top five performers on Monday were Bottom Fishing Strategies. So he suggested that, "if you do want to play the market to the upside tomorrow, Bottom Fishing, low RT, stocks should lead the way." Boy, did they. The results were incredible.

As far as the Model Portfolio is concerned, we went long yesterday with Blyar's Bottom-Feeders/BMB. But it wasn't until 3:40PM that we got the signal to do so. I was watching a real-time graph of the Price of the VectorVest Composite most of the day, and I could see the market start to rally around 1:45PM. Later I learned that bullish comments by super bear, Mr. Nouriel Roubini, gave stocks prices the kick they needed to trigger the afternoon rally.

VectorVest RealTime made it very easy to decide which Strategy to select for the Model Portfolio. I had been watching the V V RealTime Derby and Blyar's Bottom Feeders/BMB was leading the pack most of the day. At one point it was up as much as 12.9%. However, it was up only 4.22% with 60% winners when we made our decision to go with it. The V V Derby is such a wonderful tool. It performs real-time Quick Tests on 176 ten-stock portfolios and displays the results so you can see exactly what's going on at all times. Along with the gain/loss performance of each portfolio from the prior day's close or the current day's open, it displays the stocks in each portfolio and the pricing data and gain/loss percentage of each stock. A mini performance graph is also displayed with the portfolio data. Fantastic!

Even though the Mighty Dow had made an incredible gain of 565.30 points in its four day run, the Price of the VectorVest Composite was still 25 cents per share below its June 11th's close of $20.33 per share. So the downturn hasn't been wiped-out just yet. But it is interesting to note that it took 20 trading days from June 11th to get last Friday's C/Dn signal. The reason is that the Price of the VectorVest Composite spent more days going up than it did going down. From June 11th through yesterday, the Price of the VectorVest Composite experienced 11 down days and 13 up days. Now that's what I call A Reluctant Downturn.