Sure, President Reagan said: "Government is not the solution to our problem; government is the problem."

But at the moment, we're all pretty much stuck with sinking portfolios as Wall Street waits for government to solve its problem -- or at least throw it a life preserver. (The House is scheduled to vote today on a rescue plan.)

In this environment, most of our Strategy Lab players -- like most investors -- have taken a beating. But most remain way ahead of the market, and two of our portfolios stand out dramatically for the sheer number of winners they contain.

Catching two trends

Disciplined Investor Andrew Horowitz, our current leader, is running 13% ahead of the S&P 500 since we started the current round of our Strategy Lab stock-picking game at the start of August. And that includes some early losses; the average position in his portfolio right now is up nearly 8%.

Those are solid numbers for a six-month Strategy Lab round, impressive for any two-month period -- and spectacular for right now.

So how do you build a winning portfolio in this market? Horowitz's keys have been two interesting investing ideas:

On Aug. 14, he spotted a municipal budget crunch in our slowing economy (Read "New York's multibillion-dollar sinkhole") and shorted BlackRock New York Municipal Income Trust (BNY, news, msgs) and Pimco New York Municipal Income Fund (PNI, news, msgs). They're down (and he's up) 13.9% and 16.5%, respectively.

Then, in mid-September, he noticed that preferred stocks were getting beaten up and dove into several positions. (Read "A sudden preference for preferreds.") He's up 11.1% on PowerShares Financial Preferred Portfolio (PGF, news, msgs) and 7.6% on a Goldman Sachs Preferred B (GS-B, news, msgs).

He's also up 15.5% just for shorting the S&P 500 via UltraShort S&P 500 ProShares (SDS, news, msgs).

Before you chase his portfolio, though, be mindful that Horowitz has orders in place to protect most of the gains if they dip. Some of these picks are pretty adventurous -- if the S&P 500 starts moving up, for example, that ProShares fund will shed its gains twice as quickly. These are not buy-and-forget picks.

Shorting the world

Amateur Jim Van Meerten swings into second position in our race this week, and his current portfolio looks nearly as good as our leader's. Ciena (CIEN, news, msgs) and NPS Pharmaceuticals (NPSP, news, msgs) continue to be big winners, and he's scoring nice gains with recent short plays on exchange-traded funds that cover Russia, Brazil, Austria and India.

Global markets have tanked with the U.S., and in just two weeks, all those ETF plays are up more than 16% for him. In fact, he's up on 14 of 18 current positions for an average gain of around 11%.

Van Meerten has also submitted some fascinating journals on the mortgage mess from his everyday investor's perspective. Read "A simple fix to the housing mess" and "Whom can everyday investors trust now?"

Trying to hang on

Of our other players' portfolios, we can only offer that things could be worse.

Guru Investor John Reese had held the Lab lead until recently but fell sharply during this week. He's now down more nearly 11%. His big winner, Thor Industries (THO, news, msgs), has taken an abrupt downswing, and now just two of his 20 positions are making him money.

His strategy involves rebalancing just once a month, so we'll be interested to see which way his computer models point him next.

News Hound Howard Gold most recently took some profits, and his position in PowerShares DB US Dollar Index Bullish Fund (UUP, news, msgs) moved up nicely this week. But all of his others are down.

All-Star Team trader Ken Kam continues to hold a lot of cash and hasn't found much to buy in this market. For his take on this mess, don’t miss "$700 billion or Armageddon? Sounds like sci-fi."

Our defending champ, Skeptical Capitalist Vad Yazvinski made a number of moves late last week as he tries to get back on track after some portfolio glitches and a vacation that left him exposed to this market washout. Read "Why some boring stocks look like bargains" for the details.

But charting an upward course in this market isn't an easy thing.

The good news, of course, is that Yazvinski is just 4% behind the market, and the rest of our players are substantially ahead of it. But no one's celebrating. Like the rest of us, they also have real money in this market.

Better luck next week.

Meet the strategists at The Money Show

We’ll be gathering a panel of Strategy Lab players for The Money Show Washington D.C., on Nov. 6-8, and we hope you can join us for the debate. They’ll be among more than 50 investing experts on hand to help you gear up for changes in the political landscape as we move toward a new market year.

Admission is free for MSN Money readers. To register, call 1-800-970-4355 and mention priority code 010333, or visit The Money Show Web site to register free today!

By Ron Prichard, MSN Money