Investors, especially Boomers, want two things: Safety and Income. In the quest to achieve these goals, they took $233 billion out of equity funds and put $559 billion into bond funds from January 2008 to June 2010. Was this a good idea?

Two famous professors from the Wharton School of Business, Drs. Jeremy Siegel and Jeremy Schwartz, don't think so. In an article, "The Great American Bond Bubble," published in Wednesday's Wall Street Journal, page A17, they claim that bond prices are way too high and are fixing to come tumbling down just as internet stocks did in 2000. Mr. David Rosenberg, former Chief Investment Strategist at Merrill Lynch, thinks the "Two Jeremies" are dead wrong, saying that bond prices won't come down anytime soon. (See http://www.businessinsider.com/david-rosenberg-on-the-bond-bubble-2010-8.) Mr. Rosenberg believes deflation is likely to come upon us and low interest yields on totally safe T-Bonds will be looking awfully good compared to negative inflation rates. My position is that Mr. Rosenberg may be right, but I'm not interested in investing my money on a 1 or 2% return.

The "Two Jeremies" suggest that investors consider buying stocks of solid companies such as AT&T, which have a relatively high yield, currently 6.23% on 08/19/10. Mr. Rosenberg doesn't totally disagree with this, but wonders why an investor can't invest in safe government bonds and "safe" stocks. This sounds OK, but who can be satisfied with a return of less than 10% on their money?

I've done a lot of research on retirement strategies since receiving an email last summer from a subscriber requesting assistance in this area, and there's one thing I know for sure. You're never going to get the 10% return you want by buying low yield bonds and so called "high yield" stocks. Actually, I knew this from the moment I wrote my first retirement strategy essay last September. That's why two of the four strategies I described involved the technique of selling Covered Calls on dividend paying stocks. This technique was featured as our "Strategy of the Week" presentation on September 25, 2009 and it has been featured several times since then.

On June 4, 2010, I wrote an essay called, "The PayDay Portfolio." This essay reiterated my conviction that selling Covered Calls on stocks paying high dividends is a relatively safe, practical way of generating 20-30% return on your money. You need to know how to trade Options, however, to properly implement this technique. Therefore, we have illustrated the basic technique several times as the "Strategy of the Week" presentation. (See the SOTW presentations of 09/25/09, 03/26/10, 05/14/10, 07/23/10 and 07/30/10.) We also made it a bonus presentation in our Options Course and have made it available to options savvy subscribers via the purchase of a special PayDay Portfolio Report.

As of yesterday's close, a backtest of a hypothetical $100,000 PayDay Portfolio started on January 8, 2010 shows a Total Value of $130,035.95. I have been trading Covered Calls with real money for several months now in accordance with the rules described in the PayDay Portfolio Report and I'm satisfied that it's the best way I know of achieving both Safety and Income.

TAMING THE TIGER WITH COVERED CALLS.
Ever since the so called "Flash Crash" of May 6, 2010, the stock market has shown manic-depressive behavior, going back and forth from euphoria to depression on the slightest bit of news. It's been hard to make money by going either long or short, but the strategy of selling Covered Calls does both at the same time. So visit the VectorVest University to see Mr. Glenn Tompkins, Manager of Educational Services, illustrate how it is done in this week's rewarding "Strategy of the Week" presentation, "Taming the Tiger with Covered Calls."

THE $1000.00 AWARD CHALLENGE.
We believe we have a winner, but we need more time to check the results. If it pans out the way we think it will, we will give you the details next week.

The VectorVest RealTime Derby was first demonstrated at the New York Traders Expo in February 2009. It has been an exciting and fascinating tool ever since. More than that, it has proven to be an incredible source of information.

On a day-to-day basis, it tracks and exhibits the performance of 185 10-stock portfolios tick-by-tick from the moment the market opens until it closes at 4:00 PM. With the Derby, there's absolutely no problem seeing what is really going on in the market and today was no different. The major indexes opened sharply lower, but the Derby was showing Bullish strategies as the biggest gainers in early trading.

The leading Strategy was "Best Performers > $1.00." I clicked on the performance bar to see which stocks were in the portfolio and saw that Power-One, PWER, had gapped up about 20% at the open and it wasn't pulling back. I took a look at its one-year graph and saw that this stock was trading at about $1.30 per share last September and it's now over $12. Did I miss a good stock here?

Sure I missed the early moves, but the stock still looks interesting to me. It has gapped higher on high volume several times since last September and certainly looks like it's going higher. I bought some.

Then I opened the Tote Board. This tool is my favorite part of the Derby. It shows the cumulative performance of all the Strategies over any time period since August 18, 2009. The calendar for selecting the beginning and end dates of the test periods was updated recently to show the C/Up and C/Dn dates given by our Market Timing System. For example, the best performing Strategy for the Upwave which started on 02/19/10 and ended on 05/07/10 was none other than "El Cheapo Cheapos," with a Total Gain of 51.95%.

Are you kidding me? What kind of record does it have? Well along with its terrific gain, it had 62% Winning Days, 42% Winning Trades, a Maximum Drawdown of 27.43% and an Efficiency of 18.92. An Efficiency of 18.92, what's that all about? It's something that VectorVest calculates which combines the Percent Winning Days, the Percent Winning Trades and Maximum Drawdown Percentage into a single item called the Efficiency Factor.

Is 18.92 any good? Well it's not bad, but the next biggest gainer is "Thornton's Thunder," which had a Total Gain of 49.23% and has an Efficiency of 24.84. From what I can see, Thornton's Thunder had the best combination of Total Gain Percent and Efficiency during that particular up wave.

Interesting. What Strategy had the best Efficiency over that time period? "Great Stocks," with an Efficiency Factor of 32.06, but it had a Total Gain of only 3.96%. So it seems that there's a trade-off between Total Gain and Efficiency.

Of course there is, we've seen it over and over again. The most effective Strategies, those that give the highest gains, are those which return volatile, low-priced stocks and the most efficient Strategies, those that produce relatively modest gains, are those which return less volatile, higher-priced stocks. That's no surprise, but is it possible to use the RealTime Derby to find Strategies that will be both effective and efficient? Yes, I believe so. Next week I'll report some surprising things I discovered by using the Tote Board and The Efficiency Factor.

EFFICIENT PERFORMERS.
The Price of the VectorVest Composite hit a low point on July 6th; then shot higher for several days. It was time to go long. When would you have gone long and what Strategy would you have chosen? Let's see what Mr. Jerry D'Ambrosio did to make his selections. Visit the VectorVest University to see this week's "Strategy of the Week" presentation: "Efficient Performers."

MANAGING THE MONEY MAKER.
Last week, we illustrated three trades on selling Covered Calls which were based on using the Options Rate of Return tool and the "Optionable 2x4s" Strategy. Two of the trades were profitable, one was not. None of the trades were managed. This week we will illustrate how all of these trades would have been profitable, had we used the portfolio management guidelines given in the PayDay Portfolio Report.

I'll be giving an extremely important talk entitled, "Planning for a Secure Retirement" at the upcoming Money Show in San Francisco on August 20, 2010. Why do I say this is an "extremely important" talk?

On June 13th, a Financial Advisor, Mr. Adam Butler of Butler Philbrick Associates, appeared on CNBC and said that "Our models suggest there is almost a 50% chance that a couple will run out of funds before they die if they adhere to a traditional financial plan." The reasons, he said, are that traditional financial plans miss two pretty serious risks: The risk they might live too long and the risk of lower than expected market returns. Traditional financial plans generally assume a linear sequence of financial returns of say, seven percent year-in and year-out, and that is unlikely to occur. So what does one do if they dramatically underestimate what they need?

Mr. Butler said retirees should put their money in two layers. The first layer should be the "guaranteed" layer for food, shelter and so on. The second layer should include an allocation of riskier assets which provide an upside for "retirement life style needs," such as bequests, charitable giving, etc. He advocates investors broaden their asset allocations to include REITS, commodities and international stocks, in addition to traditional domestic stocks, bonds and cash.

He also believes investors should have some sort of systematic exit strategy for each asset class so that they can move to the sidelines when market risk is high and move back in when market risk is favorable.

Finally, he said investors also should consider a third layer, a "momentum" overlay, which can really increase returns with a small increase in risks. My goodness, was he talking about market timing and the use of Options to augment income?

Much of this interview came to me as a breath of fresh air because most of the retirement plans I've read fail to advise retirees of the extreme importance of being able to augment their retirement income by some independent means. You simply cannot run the risk of running out of money and the returns you will get from annuities, dividends and bonds are not going to provide the security you should have. Of course, you could always work at McDonalds or Wal-Mart, but I prefer to make my extra money by investing in the stock market. I presume that you do too. That's why we have been making presentations on retirement strategies at the Money Shows and VectorVest events.

We will be making three presentations on the subject of retirement at the Money Show in San Francisco on Friday, August 20th and we will also be giving a One-Day Options Course on Sunday, August 22nd. "The PayDay Portfolio" will be featured at the Options Course. This portfolio was started with $100,000 on January 8, 2010, and had a total value of $122,364 as of yesterday. It was down 1.69% on stock trades, but has garnered $24,470 in cash deposits so far. You may learn more about this portfolio by reading my essay of June 4, 2010.

You may also register for the Money Show by clicking on the link shown above under Coming Events. We're going to have a great series of talks in San Francisco, and it's all going to start with Planning for a Secure Retirement.

P.S. The PayDay Portfolio Report has been completed and will be shipped out this coming week. We have had many requests for this report from subscribers who have not taken our Options Course, but claim to know how to trade Options and want to buy the report. If you are among them, you may buy the report for $95.00. If you have previously attended a VectorVest Options Course or bought our Options Course CD set, you may purchase the report for only $29.00.

BUYING THE DIPS.
If you look at an 18-month Standard view of the Market Timing Graph, you will see that there have been five C/Dn signals since the great blast-off from the March 2009 bottom. Buying stocks at that time produced sensational results. You will note, however, that stocks prices did not go up in a straight line. Fear and greed are always present and once the bull market has been established, some investors begin to fear that it will end and take profits along the way. Others will stay-the-course and "climb the wall of worry." Still others, who missed the boat, will wait until the pull-backs or "dips" occur and buy stocks at slightly lower prices. Buying the dips can be very profitable if you know when and how to do it, but disastrous if you don't. Fortunately, Mr. Todd Shaffer, Manager of Research, knows when and how to do it correctly. So visit the VectorVest University to see this week's instructive "Strategy of the Week" presentation: "Buying the Dips."

A young friend of mine was informed last Wednesday that her contract was not being renewed. She had lost her job. I felt very bad about that and wondered what I could do to help her out.

I was flying home from the Las Vegas Money Show on May 15th and I read an article in the Wall Street Journal, pg. W3, entitled, "A Lament for the Class of 2010." It relates the tale of a young man who went to an Ivy League college, graduated, but is now living at home with his parents and is now working "as an intern at a street fair on the Lower East Side of New York City."

The article goes on to say, "Over the next few weeks, hundreds of thousands of Millennials will graduate from institutions of higher learning. They will celebrate for several days, perhaps several weeks. Then they will enter a labor force that neither wants nor needs them. They will enter an economy where roughly 17% of people aged 20 through 24 do not have a job, and where two million college graduates are unemployed. They will enter a world where they will compete tooth and nail for jobs as waitresses, pizza delivery men, file clerks, bouncers, trainee busboys, assistant baristas, interns at bodegas." Imagine, spending over $200,000 on an Ivy League education and working at a job where you're competing with high school dropouts.

This article rang a bell with me because I had spoken to several customers at the Money Show who aren't going to let their children or grand children want for being self sufficient. They're teaching them how to make money in the stock market. The primary goal, of course, is to make life easier for mom and dad by building a fund to help pay for college, but they are also teaching their loved ones to become financially independent. And this brings me back to my young friend who just lost her job. Wouldn't it be nice if she knew how to make money in the stock market and didn't have to depend on a job as a sole source of income? Of course it would! So I'm going to invite her to be my guest at the next VectorVest Clinic given here in the Akron-Cleveland area.

But why stop there? Why not allow you to bring a guest, someone who is not or ever was a subscriber to VectorVest, to one of our One Day Investment Clinics free of charge? They'd learn more about making money in stocks in one day than they would had they read all the investing books sold on Amazon.com. So what's in it for you? If you're bringing a "stay at home college grad," it could save you a lot of money. If you're bringing a neighbor, an old friend, or anybody else who is not or ever was a subscriber to VectorVest, we want you to get more than just the satisfaction of doing him/her a favor. We're going to give you a $29.00 Savings Certificate which you could apply toward the purchase of any VectorVest Product or Service.

What could be better than that? Come to the Clinic. Learn a lot of good stuff. Enjoy Yourself and Bring a Friend Free.

SURVIVING THE TENTATIVE BOTTOM.
Does it pay to go with the flow? I would have to say yes because that's what we do. But the market gave us a head fake in mid-June that would have done LeBron James proud. Thanks to our Market Timing System we weren't totally faked out. I called the mid-June reversal a "Tentative Bottom" in my June 11th essay and let the Color Guard be our guide. Yes, it was possible to make money over the last few weeks and Mr. Dan Misch, one of our best instructors, will show us how easy it was to do. So visit the VectorVest University to see this week's excellent "Strategy of the Week" presentation: "Surviving the Tentative Bottom."