The Second Place Winner of the VectorVest 2008 Bear Market Beaters Contest is Mr. Eugene Blyar from Greenville, Alabama. Mr. Blyar has been a subscriber for a little over three years now and his strategy is named Blyar's Bottom Feeders/BMB. It showed a gain of 27.59% from November 1, 2007 through March 7, 2008. That's very good compared to the 13.06% loss in the Price of the VectorVest Composite over the same time period.

The most striking thing about Eugene's strategy is that it uses an approach which is the completely the opposite of the one used by Richard Leclercq, last week's Third Place Winner. Eugene's strategy sorts stocks by RV/RT Desc., which is a bottom fishing sort that places the most undervalued, most beaten down stocks at the top of your screen. Richard's strategy sorts stocks by RT*CI Desc., which is a high momentum sort. It places the hottest stocks with the most consistently rising prices at the top of your screen. So Eugene is looking for dead cat bounces and Richard is looking for high fliers.

Another interesting comparison is that Blyar's Bottom Feeders/BMB uses very tight Gain/Loss limits of 9% and 4% as the exit criteria while Richard's Rangers/BMB uses an extremely wide Gain/Loss range of 70% and 35%. It seems reasonable that a tight %G/L range would work well in a bottom fishing strategy while a wide %G/L range would suit a momentum strategy. Nevertheless, I wanted to make sure. So I ran Eugene's strategy with Richard's sort. The result was disastrous. The combination of buying high fliers with tight %G/L Stops lost money right from the beginning, and it was down 33.66% on March 7th. I then ran Eugene's strategy with Richard's exit criteria. This combination of buying beaten down stocks with a wide %G/L Stops combination also lost money, but not nearly as much...losing only 16.90%. So both Eugene and Richard were right in using the exit criteria they selected.

Another interesting point is that both Eugene and Richard used a %G/L ratio of 2.00 or greater. This fact is especially important in Eugene's strategy because the win/loss ratio was about 1/2. A major drawback that concerns me with Blyar's Bottom Feeders/BMB is that it generates an insane number of trades, like over 360 in just four months! I haven't had much time to work with Blyar's Bottom Feeders/BMB but I did try widening the %G/L spread. This change lowered the performance to a 17.57% gain, but the number of trades was reduced by about 50%.

In comparing these two strategies, Blyar's Bottom Feeders/BMB is clearly for very active traders who are happy with small gains. Richard's Rangers/BMB is for home run hitters who don't mind striking out from time to time. I find both strategies intriguing and will work with them as I go along. Meanwhile, Mr. Blyar will receive a $50.00 VectorVest Savings Certificate and a check for $1,500.00 for his Second Place Winning strategy, Blyar's Bottom Feeders/BMB.

SIGNS OF DANGER.
The percentage of Buys decreased in Monday's trading and so did the percentage of Sells. This is a sign that money rotated out of rising stocks and went into falling stocks. On Wednesday, the percentage of Buys went up and so did the percentage of Sells. This is a sign that money moved out of falling stocks and into rising stocks. At the same time money rotated out of our top rated, high VST stocks as evidenced by the losses they suffered. These phenomena of rotation, focusing and wide-spread profit taking on high VST stocks are all Signs of Danger.

P.S. For more information, see my essay of 12/13/96.