Riding the Wave

Think of the money you could make if you rode the up and down movements of the market over and over again. Herein lies the key to “Riding the Wave” with VectorVest.

Think of the market as the sea. The sea is forever changing. At times it is calm, orderly and peaceful. At other times it is violent and chaotic with waves thrashing about in every direction. If one were to observe the sea from the shore, however, they would see it from a special perspective. Random, seemingly chaotic movements become directional as a procession of waves coming to shore. Sometimes the waves are small and gentle. Sometimes they are huge and violent. Surfers love these conditions. They know how to ride these waves over and over again.

The market, like the sea, also changes. It goes up. It goes down. It is buffeted by a myriad of social, economic, and political forces. Like the sea, its up and down movements appear to be random. But they are not. The market goes up and down in a distinct pattern of waves. This pattern is readily shown by our exclusive indicator, the VectorVest Composite.

Think of the money you could make if you rode the up and down movements of the market over and over again. Herein lies the key to “Riding the Wave” with VectorVest. The price of the VectorVest Composite tells us when the market is going up, and when it is going down.

VectorVest Market Timing Graph with the VectorVest Composite

It has never failed to signal a major up or down trend in the market. How can we put this knowledge to work?

How to Ride the Wave
We can do so by buying good stocks long on an upturn and selling poor stocks short on a downturn! VectorVest OnLine, our stock analysis and portfolio management system, tells us exactly which stocks to buy long and which to sell short. There are several searches for finding long candidates such as Timsons Tigers, Cash Cows and Explosive EPS Stocks. For selling short we have Early Move Down, Dougs Downers Supercharged and Worst Stocks Over $20. They produce great results!

Let’s look at some facts. We ran a back-test using our “Cash Cows” strategy in VectorVest OnLine to buy the top 10 stocks at the bottom of each wave.  We sold any stock that received a VectorVest ‘Sell’ Recommendation and replaced the position with a new selection from the Cash Cows search. At the top of each wave we sold all of our long positions. We used the resulting funds as collateral to short the worst 10 stocks as found with the “Dougs Downers Supercharged” strategy. Of course, we covered our shorts at the bottom of each wave and used the available funds to buy the 10 best “Cash Cows” stocks for the next upmove.

To get a taste of how well this strategy worked with our actual calls, we began with a $10,000 non-margin portfolio on November 18, 1999 and used the signal dates shown on Figure II. The step-by-step details of this strategy can be reproduced in their entirety with the VectorVest OnLine software. A summary of results up to August 18, 2008 is given in Figure II.

Our Riding the Wave Portfolio gained $111,947.51* in just under 9 Years. Fantastic!

*past performance is not a guarantee of future results