One of the key features of the Yellow Brick Road (YBR) strategy, described in my essay of 10/03/08, is that the portfolio is allowed to extinguish itself, i.e., not replace stocks as they are stopped-out of the portfolio. The purpose of this technique was to lock in profits and mitigate the draw-downs which occur at the end of each campaign. Unfortunately, this neat trick may take you out of the game too soon.

For example, the most recent YBR campaign, discussed in my essay dated 07/31/09, lasted only five days. Although it produced a net gain of 19.8%, I didn't like it. I would have very much preferred to have stayed fully invested, but I followed the guidelines we had set forth. Since then, I have been thinking of ways to solve this and other problems mentioned in my essay of 07/31/09. I believe I have found the answer by becoming a Green Light Buyer.

You may recall from last week's essay, I said that a Green Light Buyer is someone who buys a top VST-Vector stock every time they see a green light in the Price column of the Color Guard. This definition explains the idea of the technique, but is too restrictive. Why not define a Green Light Buyer as someone who plans to buy stocks, any stocks, whenever they see a green light in the Price column of the Color Guard? In this way, they would be buying stocks as the market goes up and they could still enjoy the full power of VectorVest. For example, I ran a back-test in which I bought 10 stocks from the Jail Break Strategy on March 17th and used a 100% Gain and 20% Loss to exit positions. As of yesterday, the portfolio was up 308.74%.

Had I utilized the Green Light Buyer technique from the time I went into cash on July 29th in the YBR portfolio, the gain could now be 69% instead of 45%. OK, so I like being in the game, but not sitting around waiting for the next C/Dn signal. So I'm going to go long again in the YBR portfolio the next time I see a green light in the Price column. I'm not necessarily going to buy top VST-Vector stocks, nor will I feel obligated to buy 10 stocks at a time. I need a little more freedom to do what I want to do when I want to do it. If I'm ever going to get to Emerald City, I've got to be On the Road Again.

As noted last week, we went long in the Yellow Brick Road portfolio on Thursday, July 23rd, with selections from the "Explosive GRT & EPS Stocks" Strategy. It was a short, bumpy ride...we were back in cash within a week.

The portfolio soared 10.8% on Thursday, rose another 6.3% on Friday and skyrocketed 15.9% on Monday of this week. Then it plunged 11.8% as we sold nine stocks on Tuesday, either to take profits or to stop losses. We sold our last position on Wednesday with another loss of 1.4%. Overall the campaign ended with a net gain of 19.8% in five days, which is not bad at all. But I didn't like it. This is not what the YBR is all about.

The Yellow Brick Road strategy was envisioned to be one that could help Prudent investors make money in both up and down markets. It was meant to be easy to use, not demand a lot of time and could be done at night when the market is closed. Unfortunately, it appears that thousands of investors jumped into the market and bought stocks from the strategy I had selected to use. This is OK if you have learned how to anticipate what I'm going to do and didn't get caught in a traffic jam, but you're not going to get the best results if you wait to see what I did. The outstanding performance of the Explosive GRT & EPS Stocks as shown in the VectorVest RealTime Derby on Monday gave evidence that our subscribers were moving the market in these stocks.

To mitigate this problem in future YBR campaigns, I will use only strategies that specify the selection of stocks with Price > $10.00 per share and AvgVol > 1,000,000 shares per day. As a point of reference, the top 10 stocks from the Explosive GRT & EPS Strategy that we used last week, had an average price of $1.89 per share and an AvgVol of 621,090 shares per day. Even though I will be making this adjustment, it doesn't mean that you shouldn't feel free to use any strategy you wish in your next campaign with The Yellow Brick Road Portfolio.

RISING CI STEALTH STOCKS.
The Comfort Index, CI, is one of our most intriguing indicators. It was first introduced to our users on November 8, 2002 and was said to be a measure of the long-term price stability of a stock. Over the last seven years we have had an opportunity to watch its performance in both good times and bad. When the market is bullish, the Comfort Index of the best performing stocks climbs higher and higher and approaches 2.00 on a scale of 0 to 2.00. When the market is bearish, the Comfort Index of all but the strongest stocks tends to go lower.

A great way to buy good stocks at low prices is to find stocks that are flying beneath the radar, but whose Comfort Index has begun a steady rise from a bottom. I've done this in a variety of ways and today we are introducing an excellent new strategy that does just that. It's called, "Rising CI Stealth Stocks."

Dorothy lived in a small, single room house in Kansas, surrounded by a sea of grass. She dreamed of living in a better place, "somewhere over the rainbow." One day she and her dog, Toto, were whisked away, house and all, by a tornado that deposited them in another land called Oz. Although the Land of Oz was very beautiful and the people, the Munchkins, were very nice, she wanted to go back home. She was advised to follow the yellow brick road to Emerald City to ask the Wizard of Oz for help.

As she walked along the yellow brick road, Dorothy was joined by a Scarecrow who wanted a brain, a Tin Man who wanted a heart, and a Cowardly Lion who wanted courage, all of whom hoped the Wizard would grant their wishes. Using traits they thought they lacked, these unlikely heroes overcame numerous obstacles in their quest to see the Wizard.

Upon meeting the Wizard, the Scarecrow received a head full of bran, pins and needles, the Tin Man a stuffed heart and the Cowardly Lion a potion of courage. Because of their faith in the power of the Wizard, these otherwise useless items happily served their owner's purpose. Dorothy was promised to be escorted back to Kansas by the Wizard who failed to do so. After overcoming a myriad of additional challenges, she ultimately returned to Kansas by virtue of her silver slippers. Upon arriving in Kansas, she realized that there's no place like home.

All of us, young or old, can relate to Dorothy and her friends. We all have dreams and aspirations. As investors, we dream of making money in the stock market and we aspire to achieve financial freedom. But we need a way to get there. We need a plan, a path, a yellow brick road, if you will.

We believe we have created such a road at VectorVest. It is based upon a foundation of fundamental parameters and technical indicators. Its bricks are made of strategies, tools and techniques and its road signs are given by the Color Guard, Market Timing System and VectorVest Views. The VectorVest "Yellow Brick Road" is a trading system which allows investors to make money in both up and down markets. It is easy to use, does not demand a lot of time and can be done at night when the market is closed.

The "Yellow Brick Road" uses two strategies, "Easy Does It - C/Up," for going long on Confirmed Up signals and "Easy Does It - C/Dn," for selling short, if one wishes, on Confirmed Dn signals. The first strategy was presented as last week's "Strategy of the Week." It produced a gain of 190.04% from March 21, 2003 to September 26, 2008. The second strategy, "Easy Does It - C/Dn" will be presented this week. You will see how it turns a brutal year, such as we are now having, into a money maker.

In addition to the wonderful results the "Yellow Brick Road" has produced, it is explicit in telling you what to do when. But to travel this road successfully, you must have character. You must have Dorothy's determination to reach your goal, the Scarecrow's brains to do things according to plan, the Tin Man's heart to control your emotions and the Cowardly Lion's courage to stick to the system.

No system is perfect, but after more than 20 years in business, I believe this is the best trading system VectorVest has ever produced for the average investor. If you don't believe me, see if you can develop a better one. If you can---then use it. You'll get rich! As for me, I believe the best path to Financial Freedom is The Yellow Brick Road.