The $64 thousand question at this week's Forex and Options Expo in Las Vegas was "What's this market going to do?" My answer was always the same, "I really don't know. That's why we're trend followers."

One of the biggest mistakes investors make is to fix a preconceived notion in their head of what the market's going to do. This notion subconsciously interferes with their trading because it causes them to see what's in their head and not what is actually going on. If the market continues to not do what they thought it would, they rationalize the market's behavior and continue to believe it eventually will do what they thought. Many a fortune has been lost in this way.

So how does VectorVest deal with the unknown? First of all, we don't try to predict the market, but we deal with what's happening right now. For example, we analyze the market's direction with our Market Timing System and we report the results of our analysis via the Color Guard. If the Color Guard was bullish and stock prices were trending higher, we would plan to buy stocks long. If the Color Guard was bearish and stock prices were trending lower, we would not plan to buy any stocks other than Contra ETFs. We might plan to sell some stocks short, however, depending upon the severity of the downtrend.

I said "We would plan to buy stocks long or we might plan to sell some stocks short," because we wouldn't actually buy or sell any stocks until we saw what the market was actually doing at the moment we intended to make the trade. In other words, we want to make certain that prices are going in the right direction when we make our trades. Moreover, I never buy a stock that is going down in price and never sell a stock that is going up. I call this "Keeping the wind at my back."

By using the Color Guard as my guide and making certain the market is going in the direction I want, I don't have to worry about what it's going to do two or three months from now...I'm prepared to accept it, as it arrives, One Day at a Time.

After attending the Las Vegas MoneyShow for more than 15 years, this was our best experience, by a long shot. The mood and sentiment of the attendees was upbeat and the feeling of confidence was back in the air. It was so nice to have so many satisfied customers visit our booths, hear our presentations and come to our reception.

The success stories I heard were most gratifying. Several customers told me how they got out of the market when we warned of the long bear market on November 2, 2007, and many others were raving about their gains since the March 9th bottom. One gentleman showed me a "real money" portfolio that was up 187%. Another showed me a portfolio that was up 242%. Still another said he bought Jail Break options on our C/Up signal in March, and he's up 525%.

A relatively new customer said, "VectorVest saved his life." He lost his job last December and began trading silver and gold futures to make some money, but he was losing his shirt. Then he discovered VectorVest and put Jail Break to work when we nailed the bottom. He gave his testimonial before 450 people at one of my presentations and showed everyone an equity chart of his portfolio which was going at a 45 degree angle. Do we appreciate this kind of feedback? You bet we do, and we gratefully say Thank You From Las Vegas.

PARADOX OF THE PEAKS.
Mr. Warren Buffett said it best, "The time to be fearful is when everyone is greedy and the time to be greedy is when everyone is fearful." Intuition, however, tells us to do just the opposite--we like to buy stocks when the market is soaring and back-off when the market is falling. Indeed, VectorVest advocates buying rising stocks in rising markets and selling falling stocks in falling markets. So who's right, Mr. Buffett or Mr. VectorVest?

Both: Mr. Buffett likes to buy stocks at bargain prices and he knows that stocks are at low prices when the market is at five-year lows. Mr. VectorVest also likes to buy stocks at bargain prices and he knows that stocks are at low prices when his Market Timing indicators are exceptionally low. In both cases, people are fearful when the market is low. Indeed, the Investor's Intelligence Indicator of Investment Advisors Sentiment hit an all-time low of 21.3% Bullish Advisors on October 31, 2008. (Please see the Investment Climate Graph.) The trick to making this approach to bargain hunting work, however, is to know when the market has stopped going down. Mr. Buffett makes no claims in this regard. Mr. VectorVest has done it time after time.

Currently, the market has risen dramatically from the March 9th bottom and Mr. VectorVest has become more fearful as the Price of the VectorVest Composite has gone higher and higher. Many of our Users have noted that our key Market Timing Indicators had risen to extremely high levels, thereby suggesting Bullish conditions. Inexperienced Users may have believed that was a good time to be greedy, but it was not. It was a time to become fearful. That's the lesson of the Paradox of the Peaks.

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.