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Model Portfolio

Philosophy

Globalization through technology has created permanent shifts in the world economy. The U.S. will account for a smaller percentage of global GDP. Wealth preservation and capital appreciation will come from global diversification. Our portfolio strategy is to invest in international securities with global reach.

Goals

Wealth Preservation and Growth

Strategy

To purchase undervalued situations and to seek companies poised for growth

Style

Active with Sector Rotation

Duration

This model has a 5 – 8 year cycle. Current market conditions favor slow entry into sectors and industries over the next two years. Traditional leading sectors will be re-adjusted in our model to accommodate the ramifications of the financial crisis and the “new economy�.

Market Capital

Our model is primarily large cap and medium cap with some small cap exposure. However, recent economic & market conditions have resulted in decreased market capitalizations for many companies so we will be evaluating company specific factors and will not exclude favored companies based solely on market cap.

Asset Allocations

Valuations are extremely low, representing an oversold market offering a rare opportunity to buy into the next cycle at historically low prices. Our model portfolio will be focused on the next secular cycle. We believe the bear cycle will complete itself over the next few quarters as unemployment peaks. We have developed a four phase model that will be heavily weighted in internationally exposed securities upon completion.

Sector Rotation

Core positions will be entered into in a leading/lagging sector strategy. When a sector is fully valued exit strategies will be implemented. Weightings will be adjusted to accommodate core positions in the next sector.


Below we have broken out buying into a four phase process. The time frames are subject to change due to market conditions.

Phase One: Buying Below Intrinsic Value We would be looking to start buying as volatility decreases, volume increases, and short-term trading ranges tighten. We see a base forming above the 7500-7800 level on the Dow and look for a confirmed upward move across a majority of sectors. Initially we would be buying positions below intrinsic value.

Cash Equivalents

Basic Materials & Industrials Energy Agribusiness Integrated Shippers

Phase Two: Expanding Sector Exposure

Technology Telecom

As the economy starts to recover, we will incorporate growth as well as value plays. Favored sectors will include Technology and Telecoms as we scale into the markets. The markets usually lead the economy 18-24 months out. We will continue to add to core positions in the sectors mentioned in Phase One and Phase Two.

Phase Three: Increasing Core Positions In anticipation of the next secular cycle, as fundamental and technical signals strengthen, we will move into the next phase increasing core positions and adding more sector plays. The estimated time horizon would be Q2 2010 as we buy on pullbacks.

Phase Four: Fully Invested Our Model should be fully invested within eighteen months as recovery moves into a growth year. We will complete the model by adding Real Estate, Construction, global banking, and international financial as well as consumer discretionary and luxury goods.

Cash Equivalents Existing Sectors

Cash Equivalents

Industrials & Consumer Staples

Existing Sectors

Cash Equivalents

Favored Sectors

R.E. & Construction Finance Cons. Disc/Luxury

Our model will be heavily weighted in international companies with global reach. Appropriate diversification in both security and sector will be applied for the individual risk parameters of the client.

Client_ModelPortfolio  

Market Capita l Asset Allocations Strategy Style Core positions will be entered into in a leading/lagging sector strategy. When a sector is...

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