American Association of Individual Investors (AAII)

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Birkelbach Investment Securities,
INC. and Birkelbach Management Corp.since 1974

Investors are irrational in a predictable
way Listen to the markets Let the markets
tell you what to do
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How to make money in the Stock Market?

• Buy and Hold?
• 50 Years 9
• 1997-2009 0

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ANNUALIZED RETURNS
ANNUALIZED RETURNS LAST 3 YEARS LAST 5 YEARS LAST 10 YEARS LAST 20 YEARS LAST 30 YEARS JAN 1926 to SEP 2009
             
SP 500 Stock Index (-) 5.4 () 1.0 (-) 0.2 () 8.0 () 11.0 () 9.8
             
Long-term Govt Bonds () 7.8 () 6.7 () 8.0 () 8.8 () 9.7 () 5.5
             
Intermediate-term Govt Bonds () 7.1 () 5.0 () 6.1 () 6.9 () 8.4 () 5.4
             
Long-term Corp Bonds () 6.0 () 5.6 () 7.8 () 8.3 () 9.4 () 5.9
             
30 day- Treasury bills () 2.5 () 2.9 () 2.9 () 3.9 () 5.6 () 3.7


Source Morningstar   Earliest date for which data was provided  
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DOW 1928-Present
Why Sideways?Global CompetitionRedistribution
of wealth from Shareholders to managementBanks,
corporations and individuals need to rebuild
balance sheets.
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The Great Sideways
Since 1997 UP 50

DOWN 50 Do you have an Investment
Strategy for this kind of market ?
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New Market Reality

• Increased Volatility
• UP 50 Down 50 will continue
• Investors must become more FLEXIBLE
• AVOID
• Buy Hold Strategies
• Mutual Funds
• New Strategy
• Learn market timing techniques to Buy Low Sell
  High
• Use ETFs to be Long and/or Short

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To be Successful in the stock market become self
sufficient

• Brokerage Reports
• Company Announcements
• News
• SP Ratings

Todays stock market prices represent investors
perception of the future
And Price is determined by supply and demand
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Becoming Self SufficientLasting Truths

• Nobody controls the markets
• We do control our selection and timing
• We cant tell the market what to do
• We can let the market tell us what to do
• The trend is your friend
• Technical Analysis (The forgotten art)
• A Picture is worth a thousand words

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• Investors are irrational in a predictable way
• Learn to listen to the market
• Let the market tell you what to do.

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The Lone Bull I Barrons 1982
DOW 1,000 to 11,000
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TheLone Bull II Fall 2002
Dow 7,200 to 14,200 --up 97.22
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Head and Shoulder
Head
Right Shoulder
Left Shoulder
Neck Line
Volume
Neck Line
Head
Amount Up
Head and Shoulder Top Formation
Right Shoulder
Left Shoulder
Amount Down
Volume
Head and Shoulder Bottom Formation
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The Dow
Giant Head and Shoulders Formation (2001
2005) 10,753 7,197 3,556 3,556 10,753
14,309 Projected Goal? (14,309 32)
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The SP 500
Giant Head and Shoulders Formation (2001
2005) 1,170 820 350 350 1170
1,520 Projected Goal? (1,520 31)
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The NASDAQ Composite Index
Giant Head and Shoulders Formation (2001
2005) 2,000 1,195 805 805 2000
2,805 Projected Goal? (2,805 45)
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Lone Bull III
Dow 6,470 to 10,000 --up 54.56
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Price of Ford February 12 2009- 1.79 Now-10.00
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• Apply technical analysis for evaluation

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The Dow Theory
Bear Market
Bull Market
Phase I
Phase III
Phase II
Phase II
Phase I
Phase III
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Characteristics of the Market Cycle
Distribution
Reversion
Progression
Accumulation
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Trend movementsLook at 3 month charts
1 year charts 10 year charts
Intermediate Trend
Intermediate Trend
Intermediate Trend
Intermediate Trend
Major Trend Line
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EXXON (XOM)5-Years as of 12/31/2009
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EXXON (XOM)1-Year as of 02/01/2010
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• Monitor your investments
• Let the market tell you what to Do.

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Resistance Area
B
GOOD
Resistance Area
A
C
E
D
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Support Area
D
C
E
B
Support Area
A
BAD
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Trendlines and Trend movements
GOOD
BAD
Uptrend Broken
Sideways Trend Broken
BAD
GOOD
Downtrend Broken
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Step-1

• Determine your risk/reward tolerance

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A stock is only a vehicle to get you to where you
want to go
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What are the benefits of using ETFs?

• Diversification
• Exposure to wide spectrum of asset classes and
  investment styles
• Helps to limit single-stock risk
• Lower Fees Expenses
• -US Equity ETFs charge relatively lower fees than
  competing investment vehicles
• Tax Efficiency
• Passive management and the creation/redemption
  process can help minimize capital gains
  distributions
• Trade on major stock exchanges throughout the day
• Not subject to trading issues associated with
  400 pricing of open-end funds
• Hedging
• - Be long and/or short the market

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EXCHANGE TRADED FUNDSETFS

• IYY Dow Jones Index Ishares
• DOG Short Dow 30 Index Proshares
• QQQQ NASDAQ-100 Powershares
• PSQ Short NASDAQ-100 Index Proshares
• IVV SP 500 Index Ishares
• SH Short SP 500 Index Proshares
• IWM Russell 2000 Index Proshares
• RWM Short Russell 2000 Index Proshares
• IEO Oil Gas-Ex Index Ishares
• DDG Short Oil Gas Proshares
• VFH Financials Vanguard ETF
• SEF Short Financials Proshares
• EEM MSCI Emerging Markets Index Ishares
• EUM Short MSCI Emerging Markets ProShares

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Current Market Assessment
Step-2
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• We avoided another Depression (Large Government
  Debt)
• Recession ending
• Corporate earnings improving because
• -Cutting expenses
• -Cutting employment
• Downstream effect negative

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The New Normal EconomySLOW GROWTH

• Consumers account for 70 of the economy
• Reverse wealth effect
• Increasing unemployment
• Maxed out on credit cards
• Home equity down
• 401K retirement funds down
• Credit tight

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DOW 1928 to Present
Why Sideways?Global CompetitionRedistribution
of wealth from Shareholders to managementBanks,
corporations and individuals need to rebuild
balance sheets.
36
The Great Sideways
Since 1997 UP 50

DOWN 50 Do you have an Investment
Strategy for this kind of market ?
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DOW 1997 to Present
11,261
Drop 14,198-6,470 7,728 Points 50 Retracement
3,864 6,470 3,864 10,334 62 Retracement
4,791 6,470 4,791 11,261
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DOW Sep 2008 to Present
9,683 - 6,470 3,213 9,683 3,21312,896
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DOW April 2009 to Present
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Technical Market Comment
Current value
Dow 10,584
NASDAQ 2,308
SP 500 1,135
Current Trends DJIA NASDAQ SP 500
Breakout Points
Short Term Up (Resistance) 10,730 2,316 1,149
Short Term Down (Support) 10,067/9684 2,140/2,040 1,072/1,029
Int. Term Up (Resistance) 11,261 2,537 1,266
Int. Term Down (Support) 9,262/8,087 1,727/1,598 878/832
Long Term Up (Resistance) 12,896/14,198 2,861/4,256 1,265/1,576
Long Term Down (Support) 6,470 1,268/1,108 666
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SP 500 1999 to Present
Drop 1,576-666 910 Points 50 Retracement
412 666 455 1,121 62 Retracement
600 666 600 1,266
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SP 500 January 2009 to Present
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NASDAQ 1999 to Present
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NASDAQ 2007 to Present
Drop 2,861-1,268 1,593 50 Retracement
797 1,268 797 2,065 62 Retracement
988 1,268 988 2,256
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NASDAQ January 2009- Present
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Hang Seng (HSIX)
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Euro to US Dollar-10 Years
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STAGFLATIONGold-1975-Present (1,120)
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Deutsche BK AG London(DGZ)1 Year Daily as of
December 31, 2009
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Step-3

• Establish the right broker/client or money
  manager relationship

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Choices

1. Discount Broker
2. Financial Planner
3. Mutual Funds
4. Broker
5. Investment Manager

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SRP vs SP 500Socially Responsible Portfolio UP
by 3.28 and SP 500 DOWN by 6.19As of January
04, 2010
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• Investors are irrational in a predictable way
• Learn to listen to the market
• Let the market tell you what to do.