American Association of Individual Investors AAII

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Birkelbach Management Corp.since 1974
We seek SUPERIOR PERFORMANCE to meetYOUR
FINANCIAL GOALS
Invest in your values Listen to your Heart
your Brain
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How to make money in the Stock Market?

• Buy and Hold?
• 50 Years 9
• Last 5 Years 14

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To be Successful in the stock market is not easy

• Brokerage Reports
• Company Announcements
• News

Todays stock market prices represent investors
perception of the future
And Price is determined by supply and demand
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Angry with the Market???
Would you put more money in the market if you
were more confident?
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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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The Lone Bull Barrons 1982
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The Lone Bull Fall 2002
To read the Investment Strategy Newsletter 519
mentioned below please visit http//www.my-broker.
com/ISL/isl10_02.htm
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Step 1

• Pick a stock that interests you

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A stock is only a vehicle to get you to where you
want to go
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Business Week Recommendations

• Date Company Price Recommended Now
• 07//11/05 MBNA 18 32 (Buy Out)
• 08/25/05 Merk 31 44
• 11/14/05 First Marblehead 32 70
• 07/27/06 Southern Copper 75 100 (Split 50)
• 08/14/06 Norfolk Southern 41 48

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Step 2

• 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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Trend movements
Intermediate Trend
Intermediate Trend
Intermediate Trend
Intermediate Trend
Major Trend Line
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Characteristics of the Market Cycle
Distribution
Reversion
Progression
Accumulation
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NASDAQ Composite Index (Ten Year)
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General Motors Corp., 10 Year High-Low Price
Chart depicting Cyclical stock variations
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MSFT
Microsoft Corp., 10 Year High-Low Price Chart
depicting Cyclical stock variations
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SNDK
Sandisk Corp., 10 Year High-Low Price Chart
depicting Cyclical stock variations
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Transocean Incorporated., 10 Year High-Low Price
Chart depicting Cyclical stock variations
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Head and Shoulder
Head
Right Shoulder
Left Shoulder
Neck Line
Volume
Neck Line
Head
Head and Shoulder Top Formation
Right Shoulder
Left Shoulder
Volume
Head and Shoulder Bottom Formation
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Dow
S P 500
10,753
1,170
9,000
1,000
768
7,197
Nasdaq Composite Index
2,000
1,600
1,108
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Step 3

• Determine your risk/reward tolerance

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Towards Corporate Sustainability

• The Market Place Economy is the dominant
  economic system in the world.
• However.Capitalist Model has changed

Corporate Sustainability brought on by... a.
Increased Govt. regulation. b. Legal
vulnerabilities. c. Public Outcry on corporate
practices.
Shareholder Exploitation by Top Mgmt. a.
Excessive greed for profits b. Ignore long term
performance
1.Exploitation of Labor 2.Monopoly for Profits
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A Philosophy of Corporate Sustainability
Reduces Your Risk By reducing the vulnerability
to government intervention, legal entanglements
and the wrath of public opinion. Enhances
Shareholder Value By Investing in the majority
of companies whose product, services and methods
of operation generate positive opportunity for
economic growth and enhance the human condition.
In addition, we can customize the holdings of
your account to include or exclude a social
criteria important to You.
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Step 4

• Monitor your investments

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Resistance Area
B
Resistance Area
A
C
E
D
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Support Area
D
C
E
B
Support Area
A
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Trendlines and Trend movements
GOOD
BAD
Uptrend Broken
Sideways Trend Broken
BAD
GOOD
Downtrend Broken
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Dow
Nasdaq
SP 500
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Step 5

• Establish the right broker/client or money
  manager relationship

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Choices

• Discount Broker
• Financial Planner
• Mutual Funds
• Broker
• Investment Manager

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Mutual Funds vs. Managed Accounts?

• 80 of the Mutual Fund managers under perform the
  market.
• Personalized attention - Talk to readily
  accessible analysts who manage your account
• Tailoring of portfolio to meet your return vs.
  risk expectations
• Customizing the portfolio to incorporate social
  criteria important to you
• Tax efficiency pay taxes only on the capital
  gains you realize
• Competitive management fees1
• No hidden or cash drag expenses
• Full transparency and knowledge of your holdings2
  
• Lower turnover3

1Unlike mutual funds, managed accounts charge a
fixed of assets managed. This fee is negotiable
and is inversely related to assets
managed. 2Mutual Funds typically send out
quarterly reports of holdings. In managed
accounts clients have daily access to their
holdings. 3If your portfolio strategy is
index-oriented, turnover could be low compared to
a more actively managed account.
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Five Point Investment Process
1. SP 500 (Social Screening)

• 3. Technical Methodology Buy/Sell Stock
  Candidates
• Proprietary Strategy Index.
• Cycles, Trends, Indicators.

• 2. Quantitative Methodology Buy/Sell Stock
  Candidates
• Proprietary Methodology
• Alpha/ Beta etc.

• 4. Qualitative Stock Analysis
• Financial Criteria
• Corporate Sustainability

• 5. Market Strategies
• Economic Criteria
• Technical Indicators1

Active Growth Objective
Aggressive Growth Objective
Growth Objective
Growth Income Objective
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Model Growth Portfolio Returns

• 5 Year Cumulative Returns Growth
  Portfolio Up 45.53 (post commissions) SP 500
  Down
• 14.52
• (Annualized 6.6 vs. -3.5)
• 3 Year Cumulative Returns Growth Portfolio Up
  76.11 and SP 500 Up 36.27
• 1 Year Cumulative Returns Growth Portfolio Up
  17.26 and SP 500 Up 7.39

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Growth Portfolio Equity Style Box
Diversified across Sectors, Market Caps, and
Value-Growth Spectrum
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Birkelbach Actual Portfolio vsSP 500
IndexBirkelbach Actual Portfolio up by 20.11
and SP 500 up by 10.11
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Current Market Assessment
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3 Year Price History SP 500 Index (10/18/2003
10/16/2006)
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3 Year Price History Dow Jones Industrial
Average Index (10/18/2003 10/16/2006)
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3 Year Price History NASDAQ Composite Index
(10/18/2003 10/16/2006)
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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) Small Head
and Shoulders Formation (2002 2003) 9,000
7,197 1,803 1,803 9,000 10,803 Projected
goal completed 2005
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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) Small Head
and Shoulders Formation (2002 2003) 1,000 820
180 180 1000 1,180 Projected goal
completed 2005
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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) Small Head
and Shoulders Formation (2002 2003) 1,750
1,195 555 555 1750 2,305 Projected goal
completed 2005
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Birkelbach Management Corp.
www.InvestmentValues.biz
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Norfolk Southern Corp (NSC) 5 year chart
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Norfolk Southern Corp (NSC) 1 year chart
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Norfolk Southern Corp (NSC)
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Advantage Energy Income FD (AAV)5 Year Chart
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Advantage Energy Income FD (AAV)1 Year Chart
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Advantage Energy Income FD (AAV)