I received an email from a subscriber recently that said, "I retired four years ago with about $650,000 in 401K's and IRA's. This is essentially all the savings I have which is now about $500,000. I lost about $150,000 in the 2008-2009 period plus the drawdown of $3000 per month pre-tax. However, I've enjoyed some great swings to the upside exceeding $100k a number of times, but 2008 really hurt. I need a prudent growth strategy to generate 10% annually with some reliability. This could be dividend stocks combined with growth so I am in when your market timing indicators say I should be; out when you tell us and a safe downside short or ETF strategy. So a retirement strategy for people in IRA's or 401K's that includes the drawdowns while maintaining the principal is the challenge. What approach would you take?"

The first thing I would do is to open an account with a discount broker and make sure that I could sell Covered Calls. Then I would allocate my money into five parts. Two parts, i.e., $200,000, or 40%, would go into relatively safe bond funds that were paying about 6% interest. I would then create three stock portfolios with the remaining $300,000. The first of these portfolios would be created as follows:

Vector + Vector. This portfolio would be based upon the Vector + Vector strategy, which is ideally suited for retirement portfolios. It finds stocks with the best combination of VST-Vector for capital appreciation and YSG-Vector for current income. I ran this strategy as of yesterday and it found only one stock. So I copied the search and revised it. I lowered the RS requirement from >= 1.50 to >= 1.25. I also adjusted the search to return only xA, xN and xO stocks. It then found 15 stocks. I also ran the revised search as of March 26, 2009. It found 20 stocks. Quick test showed that the top 10 stocks when sorted by VST + YSG gained 26.97% with 100% winners. This is less than the 31.80% gain of the VVC, but it's not bad.

I then put the top 10 stocks from March 26th into a WatchList called Vector + Vector, 1.25. It showed that the average Dividend Yield, DY, was only 1.30 percent. That's not so hot, but I'm not worried because I would sell out-of-the-money Covered Calls against these stocks to generate current income. This income could easily exceed $15,000 dollars per year. The really good news is that a comparison graph showed that the portfolio of these stocks handily outperformed the VVC over the last 1, 2 and 3 year periods. So I feel pretty good about the Vector + Vector portfolio.

Now I have to get to work putting the last $200,000 to good use. My challenge is that I expect to make only about $25,000 to $30,000 dollars of current income from my first $300,000 of investments. So I'm going to have to generate a higher rate of return on the remaining $200,000 and I can't afford to take on too much risk. I'll explain how I intend to accomplish this task next week. In the meantime, you can get started on doing the things we discussed right here in Retirement Strategy - Part I.

BEELINE WINNERS.
Last week I wrote a few words about how I had been intrigued by stocks that had received two or more consecutive "B" recommendations. I called them "BeeLine" stocks and I also said I had never turned the idea into a killer Strategy. Well, maybe we got one.

Mr. Jerry D'Ambrosio, one of our best Product Support Reps, did an extensive study of the performance of "BeeLine" stocks and arrived at some startling conclusions. He will share them with us in this week's "Strategy of the Week" presentation. So join Jerry at the VectorVest University and learn all about an exciting new strategy that you're going to love: "BeeLine Winners."