One of the key features of the Yellow Brick Road (YBR) strategy, described in my essay of 10/03/08, is that the portfolio is allowed to extinguish itself, i.e., not replace stocks as they are stopped-out of the portfolio. The purpose of this technique was to lock in profits and mitigate the draw-downs which occur at the end of each campaign. Unfortunately, this neat trick may take you out of the game too soon.

For example, the most recent YBR campaign, discussed in my essay dated 07/31/09, lasted only five days. Although it produced a net gain of 19.8%, I didn't like it. I would have very much preferred to have stayed fully invested, but I followed the guidelines we had set forth. Since then, I have been thinking of ways to solve this and other problems mentioned in my essay of 07/31/09. I believe I have found the answer by becoming a Green Light Buyer.

You may recall from last week's essay, I said that a Green Light Buyer is someone who buys a top VST-Vector stock every time they see a green light in the Price column of the Color Guard. This definition explains the idea of the technique, but is too restrictive. Why not define a Green Light Buyer as someone who plans to buy stocks, any stocks, whenever they see a green light in the Price column of the Color Guard? In this way, they would be buying stocks as the market goes up and they could still enjoy the full power of VectorVest. For example, I ran a back-test in which I bought 10 stocks from the Jail Break Strategy on March 17th and used a 100% Gain and 20% Loss to exit positions. As of yesterday, the portfolio was up 308.74%.

Had I utilized the Green Light Buyer technique from the time I went into cash on July 29th in the YBR portfolio, the gain could now be 69% instead of 45%. OK, so I like being in the game, but not sitting around waiting for the next C/Dn signal. So I'm going to go long again in the YBR portfolio the next time I see a green light in the Price column. I'm not necessarily going to buy top VST-Vector stocks, nor will I feel obligated to buy 10 stocks at a time. I need a little more freedom to do what I want to do when I want to do it. If I'm ever going to get to Emerald City, I've got to be On the Road Again.