For the last nine months, I have been writing about the fact that portfolios of high VST-Vector stock prices go up over time and one could make a lot of money if one had the patience and intestinal fortitude to buy and hold them for an extended period of time, say nine to twelve months. Since I am somewhat deficient in both of the key characteristics required to be successful with a "buy and hold" strategy, I asked for your help in the form of a competition to devise a strategy for actively managing a portfolio of high VST stocks that would capture the attractive gains seen in our performance studies. I called it "The Chairman's Challenge."

The three winning strategies were reviewed in my essays of 05/26/06 and 06/02/06. While each of these entries beat the 198% gain illustrated in our 03/24/06 "Strategy of the Week," none of them provided the downside safety I was looking for. So I created my own strategy, called "Summer Hiatus," which was illustrated last week. I said the equity curve (over a ten plus year time period) was a thing of beauty, and I would use the strategy to invest my own money. Now here's how I will do it.

1. I'm going to wait until October 6, 2006 to make my first stock selections.

2. I'm going to use 20 positions instead of the 15 used in the strategy because I want the increased diversification a twenty stock portfolio provides.

3. I'm going to open five positions in each of four consecutive weeks rather than all 20 at the same time. Again, it's a matter of diversification.

4. I'm going to limit my positions to only two per Business Sector. I hope you know why.

5. I'm going to buy 9-month, at-the-money Call Options instead of stocks whenever possible. This action will greatly reduce the money I have at risk. Please see my essay of February 17, 2006 called "Albert's Gift to VectorVest."

6. I'm going to sell, short-term, out-of-the-money Put Options on the underlying stock positions whenever the market is in an up-trend. With luck, this action will reduce the cost of my Call Options. However, it will also increase my risk of incurring substantial losses. Please see my essays on Synthetic Long Positions dated October 7, 2005 and December 17, 2004.

With the exception of possibly selling naked Puts, everything I'm going to do is aimed at gaining the upside potential of owning a portfolio of high VST-Vector stocks long-term without suffering the pain of market downturns. Can I have my cake and eat it too? I think so, and that's My Game Plan.