For the last three weeks I've been writing about a $500,000 retirement strategy for people in IRAs or 401Ks that would produce $50,000 per year of current income while maintaining the principal. I said that I would put $200,000 into relatively safe bond funds that were paying about 6% interest and then build three $100,000 stock portfolios with the remaining $300,000. Three new searches, which may be found in the UniSearch Tool located in the Strategy Group called, "Strategies - Retirement," were created which could be used to build these portfolios.

My biggest concern regarding the idea of managing stocks for current income is that of losing sight of capital preservation. In other words, you may become so intent on capturing a dividend payment that you end up holding stocks that should have been sold. Consequently, you will lose a lot more money than you could have possibly made in current income. Don't let that happen to you. Capital preservation should be your top priority. The first portfolio to build is the one comprised of optionable, high VST+YSG stocks.

Given current market conditions, I would do this by running the "High VST+YSG Stocks" search using the Options Rate of Return Tool, set for December Expiration, At the Money Calls, sorted by Option ARR. This search returned 19 Records, as of 10/08/09. BKE was at the top of the list, showing an Option Price of $3.96 per share and an Option ARR of 55.74%. At approximately 2:30 PM, Yahoo!Finance said the stock was down 78 cents and the option price was only $2.40 per share, lowering the ARR to 33.80%. These figures meet my criteria of trading only stocks with an Option Premium of at least $2.00 and an Option ARR of at least 25%, so I would consider buying it on an up move.


The next stock, GG, does not have a Dec option, so I looked at the Jan 40. It showed an option price of only $2.21 per share, which means the Time Value of the option, was only 40 cents. I don't like to trade anything with a Time Value less than $1.00, so I moved on down the list.

Finally, I got to CVS. It didn't have any Dec Options, but the Jan 35 premium was shown as $2.82 per share. This price gave an Option ARR of 28.44%, which is OK in my book. Its stock graph could be stronger, but I'd give this stock a shot.

As you can see, it's going to take a little effort to build this portfolio, but just take it a step at a time. Before you know it, you'll be dealing with some really good prospects. And don't stray too far from the criteria of trading only stocks with an Option Premium of at least $2.00 and an Option ARR of at least 25%. You also don't need to completely fill your first portfolio before starting on the second and third. Actually, it might be a good idea to start off with just two or three stocks in each portfolio so you can gain experience and become accustomed to Managing Your Retirement Stocks.

WINNING WITH WEEKLY WINNERS.
Several months ago we began delivering videos of the Daily Color Guard Report. Its primary function was to keep you abreast of the market. In this regard, we reported the daily winners, i.e., the best performing Strategies, of the VectorVest RealTime Derby. The idea was to inform you of the hottest strategies on a daily basis. Some of these strategies exploded even in a lackluster market. Which ones were they?

Mr. Glenn Tompkins, Manager of Internal Training, will show us how to identify these Strategies on a timely basis so you can jump on the fastest horses and ride them to the bank. So join Mr. Tompkins at the VectorVest University to see this week's "Strategy of the Week" presentation: "Winning with Weekly Winners."