Since writing the essay "Retirement Strategy - Part I" on September 18, 2009, I have continued to receive a steady stream of emails from subscribers seeking a combination of safety, capital appreciation and current income. In this regard, I tested an old favorite strategy of mine, Vector + Vector.

Alas, I found that the RS requirement was too stringent to find enough stocks under current market conditions, so I lowered the RS requirement from 1.5 to 1.25. Indeed, this adjustment did allow the search to return more stocks, but the dividend yields were pretty skimpy. So I adjusted the search again to find only optionable stocks, thinking that I could generate current income by selling Covered Calls. I named the new strategy "High VST + YSG Stocks," and put it into a new strategy group in the UniSearch Tool called Strategies - Retirement.

The following week, September 25, 2009, I created another search which was designed to find reasonably safe stocks with high dividend yields. I called it "High Yield 2x10s" and put it into the Strategies - Retirement Group in UniSearch. The top 10 stocks found by this search on September 25, 2009 had an average dividend yield of 13.64%.

On October 2, 2009, I created a third search, called "Optionable 2x4s," which aimed to find optionable stocks paying dividends of at least $2.00 per share and yielding at least 4%. This search was also placed into the Strategies - Retirement folder in UniSearch.

Finally, on October 9, 2009, I wrote an essay called, "Managing Your Retirement Stocks," which explained and illustrated how one might go about capturing both the dividend and the option premium. Although I thought I had written all that I needed to on the subject, the e-mails kept coming in, especially in regard to bond funds. So I wrote an essay on October 16, 2009 called, "Relatively Safe Bond Funds Paying 6%."

But the emails keep coming in. So what else can I do? How about trying to combine some of our bottom fishing ideas along with capturing high dividend yields? How could we do this? Well let's find some of the biggest, safest stocks that have been beaten down in price and still pay juicy dividends. Hmm, our Blue Chip Bargains strategies find the biggest, safest stocks and they're nearly all optionable. But how can we find those with the highest dividend yields?

Simple. Just sort by DY Desc.

Hey, that works pretty well, but where does the bottom fishing part come into play? Well dividend yields go up when prices go down, so if you sort by DY Desc., you automatically find stocks that have gone down in price. It's a technique used by many money managers. Yes, but what about the quality of the dividends? Are they safe? Well let's sort by YSG Desc. Hey, that works even better, but I still want to do a little better job of bottom fishing. How should I do that? Try sorting by the YSG/CI Desc. That ought to do it.

Wow! I don't believe what I'm looking at - a 95.47% gain since March 10, 2009 with 100% winners and a 5.17% dividend yield. I think I've found a Retirement - Strategies - Blue Chip Bonanzas.

Blue Chip Bonanzas.
If you're interested in building a portfolio that has it all: safety, capital appreciation, above average dividend yields with optionable stocks and low portfolio turnover, join Mr. Steve Chappell, Director of Educational Services, at the VectorVest University to see this week's wonderful "Strategy of the Week" presentation: "Blue Chip Bonanzas."

I don't believe in buying stocks that are going down in price. A lot of people do, however, and it's a fact we have to acknowledge. It seems that more and more investors, who may have missed the rally from the March 9th bottom, have been waiting for prices to fall so they can get into the market more cheaply. I wrote about this in last Friday's "Strategy" section of the Views and it's a common practice called, "buying the dips."

It also seems there is still a lot of fear in the market, so traders have been quick to sell, nailing down small profits. The net result has been an up and down market, the likes of which we have never seen before. Specifically, the Price of the VectorVest Composite went up two weeks then down two weeks in five consecutive waves on a Friday-to-Friday basis since September 4, 2009. In the meantime, the Buy to Sell Ratio, BSR, went from above 1.00 to below 1.00, giving a C/Dn signal on Wednesday, October 28th; then, on the current up wave, the BSR went from below 1.00 to above 1.00 on Wednesday, November 11th, giving a C/Up signal. This event produced the third reversal of a confirmed signal so far this year...another first.

As you might expect, I have received numerous phone calls and emails complimenting me on this extraordinary feat and offering helpful advice. The only thing I can say is that we call it the way we see it. If the market goes up we report it, if it goes down we report it. Our Market Timing System has served us well over the years and I'm not going to ditch it now. But I am going to use it more wisely.

I've known for a long time (see my essays of 01/04/08, 01/11/08 and 01/18/08), that the Pros "sell the rallies" in a Bear market and "buy the dips" in a Bull market. Even though I think we're in a Bear market rally, most investors believe we're in a Bull market, so they're "buying the dips." This means that it won't pay to sell-short when these guys are waiting to buy stocks every time they go down in price. You can't fight market psychology. I tried it during the 2003 - 2007 Bull run and it was largely unsuccessful. OK, so if we're going to "buy the dips," when should we do it and what Strategies should we use?

In my essay, "When To Go Long," dated January 4, 2008, I said, "An Aggressive Investor would wait until the Primary Wave gives an Up signal." This guidance is just as good today as it was then. So what Strategies should we use? I covered this subject on January 11, 2008, but a lot has changed since then. We have some great new Strategies now and the VectorVest RealTime Derby keeps us abreast of the Strategies that are cooking at the moment. Even so I wanted to put myself into the place of an investor who was actually "buying the dips." What would he or she buy?

I concluded that most of these investors would be "Value Investors," looking for beaten-down bargains. So I began to play with some of our Bottom-Fishing Strategies. I got some interesting results; then I asked Dan Misch, one of our Product Support Specialists, to dig into the problem. He got some stunning results.

Visit the VectorVest University to see what Dan found in this week's "Strategy of the Week," "Buying the Dips."

Five weeks ago, when we got a Confirmed Up signal, I wrote an essay called, "Time to Transition." It was meant to show how stocks with weak fundamentals fly upward in Price when the market rallies from a bottom, but stocks with good fundamentals do not perform as well. The Price performance of the weak stocks, however, tends to peter-out in a relatively short time while the Price performance of the strong stocks tends to get better as time goes by. Therefore, I was suggesting that it was time to transition from picking weak, beaten down stocks with "S" ratings to solid stocks with "B" ratings.

To my amazement, our Bottom-Fishing strategies continued to work well and even outperform high VST stocks, so I have stayed with Bottom-Fishing strategies to the current time. Furthermore, I was quite impressed by last week's "Strategy of the Week" presentation, "Digging for Gold Using Stock Viewer," given by Glenn Tompkins. You may recall that the best result he showed was obtained by sorting by RV, Relative Value, Desc. It was up 87% from 03/10 to 04/23. This result is logical since RV goes up when a stock's Price goes down and the stocks Glenn found certainly had gone down as shown by their low RT, Relative Timing, values.

Hmm, I wondered, what would I find if I looked at the stocks with the lowest RT's? So I sorted Stock Viewer by RT Asc. I really expected to get a lot of crazy, low-priced stocks from this sort, and I did get some. But the percent gain was 230%. Wow! The percent gain from 03/10 to yesterday's close was 274%. Wow! Wow!

OK, the results are astonishing, but how can I get a selection of stocks with better fundamentals? Sort by VST/RT, of course! So I clicked on the Edit button, selected VST/RT from the list of Custom Sorts and clicked on the radio button to the left of Desc. This sorted Stock Viewer by VST/RT Desc. Uh Oh. I got a gain of only 167%. Somehow, I had to start with a list of better stocks. This meant that I had to use UniSearch, which I didn't want to do because the beauty of Glenn's presentation was its simplicity, or I had to use WatchLists.

The first WatchList I tried was Blue Chip Bargains. Sorting by RT ascending worked like a dream. Would it work with the S&P 500? You betcha! Does it work with the Russell 2000? Oh my goodness! The results were incredible. Well, doing this was simple enough. I just open the WatchList of my choice, set the date and sort by RT ascending. Fantastic. So I did this over and over again, testing different combinations of low points to high points as identified on the Market Timing Graph, going all the way back to 1997. The results were fantastic just about every time.

Now I want to use this bottom-fishing technique in managing portfolios. The easiest way is to create Strategies in the UniSearch Tool. These Strategies are named as follows: Blue Chip Bargains/RT, S&P 500/RT, Russell 2000/RT and they're all located in UniSearch in the Strategies - Bottom-Fishing Group. To make things really convenient, we took our other favorite bottom-fishing strategies, such as Jail Break - No Contra ETFs, Blyar's Bottom Feeders/BMB and so on and also put them in The New Strategies - Bottom-Fishing Group.

I just finished re-reading Chapter 15, Bottom Fishing: The Art of Buying Low and Selling High, in my book, "Stocks, Strategies and Common Sense," and I was reminded of how hard I thought it was to do. In fact, I wrote that, "Buying low and selling high is not as easy as it sounds."

Well, I wrote that in 1997 and I've learned a lot since then. One of the biggest lessons, and perhaps the hardest one to learn, is to buy "S" rated stocks when bottom-fishing. Yes, I know that "S" means Sell, so why would I be buying "S" rated stocks? Simply because bottom fishing is all about buying stocks which have been beaten-down in price and are about to start going up.

With VectorVest, it's easy to tell when a stock's price has been beaten down. I simply look for stocks with low Relative Timing, RT. I know that all of these stocks will have "S" ratings because their Prices will be below their Stop-Prices. So this part of bottom-fishing is really easy...at least it is when you have VectorVest.

The hard part, however, was in knowing when these beaten down stocks are about to go up. Intuitively, I knew that the best time to go bottom-fishing was when the market exploded from a bottom, but identifying that crucial event was the trick. It was hard to do until we developed our Market Timing System in 1995. Since then, VectorVest has a stellar history of advising its subscribers to go bottom-fishing at the right times. For example, we advised our readers to go bottom-fishing on August 2, 1996, just as the market was rising from a bottom. The following week, we presented a five step bottom-fishing procedure "that can pay big dividends."

Had you followed those instructions and held the top 10 stocks ranked by VST Desc until yesterday's close, you'd be up 103.2% with eight winners and two losers. Had you bought the top 10 stocks ranked by VST/RT Desc and held them until yesterday's close, you'd be up 486.7% with seven winners and three losers. Over this same time period, the S&P 500 Index gained 30.7% and the Price of the VectorVest Composite went down 9.6%.

While we were proud of our bottom-fishing capabilities even 13 years ago, we always wanted to get better. Some of this history was presented in my essay of March 27, 2009. Most importantly, we illustrated in that essay and in the associated "Strategy of the Week," how sorting by VST/RT gives explosive profits and sorting by VST gives wonderful long-term results. But the biggest factor in successful bottom-fishing is getting in at the right time. I think we've gotten pretty good at that too, but you're the judge.

All I can say is that when we alert you to an imminent rally like we did on March 6, 2009 and give five proven strategies to use, and repeat the guidance on March 9th, the day the market bottomed, and we're sitting at our computers ready to buy on March 10th when the market exploded, that's Bottom-Fishing Made Easy.