If I offered you a list of 20 stocks to buy and said they were virtually certain to make money if you held them long enough, would you buy them? Probably not.

If I said these stocks had a 99% chance of going up in one year, would you buy them? You might think about it.

If I gave you tons and tons of evidence that similar lists of stocks have been going up in price and beating the market for the last ten years, would you buy them? Maybe.

So what's the problem here?

As I see it, the problem is the risk of commitment. Personally, I'd hate to be committed to a fixed portfolio of 20 stocks for a whole year because a lot of bad things can happen in that period of time. Should the market go down, I couldn't stand the stress of watching my portfolio go to pot without trying to do something about it--even if I truly felt it would go up in the future. On the other hand, I can't stand the envy of watching my portfolio underperform the market, should a roaring rally occur. Envy, actually, is less of a problem for me than stress is, but I don't like it very much either. So buying and holding a sacred portfolio of stocks is just not for me. I'll admit it, I'm a control freak.

Herein lies the reason for our contest, The Chairman's Challenge, described in my essay of 03/24/06. I'm looking for a way of making solid profits with high VST stocks without committing to a long-term buy and hold strategy. Yes, I know that rebalancing once a year improves the results of buy and hold strategies, but I want a simple way of buying and selling stocks which lowers my risk of loss and still beats the gains indicated by the buy and hold strategies. This sounds easy to do, but it's not. For example, if I bought the top 20 VST stocks on 01/05/96 and held them until yesterday, I'd be up 308.30%. Not bad. But listen to this. Had I purchased the top 20 VST stocks on 01/05/96 and rebalanced each succeeding year on the first Friday in January, I'd be up 993.82%. Mamma mia!

I've tried eighty ways to Sunday to beat this performance and I haven't done it yet. Maybe I'll get some help from the strategies coming in from The Chairman's Challenge. You may recall that it only has to beat a 198.15% gain since 01/03/03. If the winning strategy doesn't give what I'm looking for, I may just have to learn how to relax and stop being a Control Freak.

ENERGY STOCKS.
Two years ago, April 2, 2004 to be exact, I wrote an essay called "Energize Your Portfolio." I wrote an update last year on 04/08/05. My point was that the party wasn't over. Quick Test shows that the Petroleum stocks were up an average of 41.95% since then. My point again this year is that the party ain't over yet for Energy Stocks.

THE CASE 3 BULL MARKET SCENARIO.
Last week I said that Case 3 Bull Market Scenarios don't last very long. Indeed, it was almost gone by the end of the day. The average value of the CPI and CRB inflation indicators closed at 1.00 last Friday, down from 1.025 in the prior week. So we couldn't say that inflation had reverted back to a rising trend. However, the CRB Index rose from 333.18 last Friday to 337.18 today, causing its trend indicator and the average of the CPI and CRB trend indicators to also go below 1.00. We are now in a Case 4 Bull Market Scenario in which earnings, inflation and interest rates are rising.