Tactical Alpha PortfolioMarch 2011 Update
Trey HaydonVice PresidentPortfolio ManagerPortfolio Manager404-240-6700
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Disclosure
The information contained in this report is based on sources considered to be reliable but is notrepresented to be complete and its accuracy is not guaranteed. This report is designed to providecommentary onmarket strategy and the opinions expressed reflect the judgment of the author as ofthe date of publication and are subject to change without notice. This report does not constitute anoffer to sell or a solicitation of an offer to buy any securities. Morgan Keegan & Company, Inc., asubsidiary of Regions Financial Corporation and its officers directors shareholders employees andsubsidiary of Regions Financial Corporation, and its officers, directors, shareholders, employees andaffiliates and members of their families may have positions in these securities and may, as principal oragent, buy and sell such securities before, after or concurrentlywith the publication of this report. Insome instances, such investments may be inconsistent with the opinions expressed herein. An employeey p p p yof Morgan Keegan & Company, Inc. may be amember of the Board of Directors of companies referredto in this report. Morgan Keegan & Company, Inc. may, from time to time, perform or solicit investmentbanking or other services for or from a company, person or entities mentioned in this report. Theb ki ffili t f R i Fi i l C ti h d l d t fbanking affiliates of Regions Financial Corporation may serve or may have served as lenders to any ofthe companies or securities mentioned in this report. The securities and other investment productsdescribed in this report are: 1) Not insured by the FDIC, 2) Not deposits or other obligations of, norguaranteed byMorgan Keegan& Company, Inc., Regions Financial Corporation or any of theirguaranteed byMorgan Keegan& Company, Inc., Regions Financial Corporation or any of theiraffiliates, 3) Subject to investment risks, including possible loss of the principal amount invested.
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Secular Bears Begin when PE’s are High…
…and the Average Length of a Secular Bear Market is 18 years.
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Last Secular Bear (1966 – 1982)…Not a good environment for “buy and hold” investing.
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Win by Not Losing
S&P Average Annual Return 1990-2010 6.23%
Your Average Annual Return would have
Your Average Annual Return would have
If you missed the been If you missed the been
Best 10 Days 2.78% Worst 10 Days 10.13%
Best 20 Days 0.52% Worst 20 Days 12.88%
Best 30 Days -1.39% Worst 30 Days 15.17%
Best 40 Days -3.16% Worst 40 Days 17.21%
Your Average Annual R t ld h
If you missed theReturn would have
been
Best and Worst 10 Days 6.55%
Best and Worst 20 Days 6.81%y
Best and Worst 30 Days 6.90%
Best and Worst 40 Days 6.85%
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Tactical Alpha
Methodology
1. Global allocation portfolio that can invest across 6 major asset classes
1. US Equity2. International Equity3. Fixed Income4. Currencies5. Commodities6. Money Market (Cash)
2 Relative Strength analysis across 1 000+ ETFs representing the 62. Relative Strength analysis across 1,000+ ETFs representing the 6 major asset classes.
3. The Portfolio is divided into 3 equal parts (or legs) and invested in the markets with the greatest Relative Strength
1 33% i th t t t l (L 1)1. 33% is the strongest asset class (Leg 1)2. 33% is the second strongest asset class (Leg 2)3. 33% is US equity always (Leg 3)
4. Monitor portfolio daily for changes in Relative Strength5. Maximum of 66% Cash allowed in Bear Markets
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Improving our odds…
Number of days each Asset Class was emphasized for inclusion in the tactical portfolio using Relative Strength analysis :
BEAR BULL BEAR BULL
Asset ClassJan 2000 to June 2003
June 2003 to Jan 2008
Jan 2008 to Mar 2009
Mar 2009 to Sept 2010
US Equity 137 616 0 264q y
Intl Equity 0 1555 12 391
Commodities 777 1008 201 145
Foreign Currencies 0 0 203 0
Fixed Income 851 0 148 99
Cash/Money Market 735 171 316 203
Total Days 1250 1675 440 560
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Trading history for the portfolio
Asset Classes emphasized and dates of Portfolio Changes
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Tactical Alpha
Current HoldingsMarch 31 2011
Name Ticker % WeightRydex S&P Equal Weight RSP 28.61P Sh DB Sil DBS 17 53PowerShares DB Silver DBS 17.53PowerShares DB Agriculture DBA 15.9First Trust Dow Jones Internet Index FDN 7.89First Trust Consumer Disc AlphaDEX FXD 7.49First Trust NASDAQ-100-Tech Index QTEC 7.21First Trust Materials AlphaDEX FXZ 6.95First Trust Financials AlphaDEX FXO 6.67Default Cash 1 75Default Cash 1.75Total 100
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Performance
Tactical AlphaPerformance
Through March 31 2011Results are gross
Annual Returns 2007 2008 2009 2010
Tactical Alpha 7 97 -9 17 23 40 12 35Tactical Alpha 7.97 9.17 23.40 12.35
SP500 5.49 -37.00 26.46 15.06
Monthly Returns Jan-11 Feb-11 Mar-11
T ti l Al h 1 81 2 28 0 93Tactical Alpha -1.81 2.28 0.93
SP500 2.37 3.43 0.04
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Why doesn’t everyone do this?
1. Relative Strength forces us to do what is unnatural- there may be no fundamental
reason that can be found for the shift.
2. Hold onto the Winners Long Term and Sell the Losers QUICKLY! 80% of the profits
come from 20% of the trades.
3. Difficult to hold the course at turning points- nobody can catch the top or the bottom.
4. Choppy markets are very frustrating. Like a sail boat luffing in light wind waiting for
the next gust.
5. Requires discipline, time and broker discretion.5. Requires discipline, time and broker discretion.
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Account Information for Tactical Alpha Strategy
• The strategy is Core Growth.• Minimum account size is $50,000.• The strategy is deployed in a brokerage account or an IRA
held at Morgan Keegan.• All accounts are individually titled. There is no co-mingling
of assets.C l t t f h ldi th h th M• Complete transparency of holdings through the Morgan Keegan Client website.
• Client will receive a monthly statement and quarterly performance reportingperformance reporting.
• Management Fee of 1.5% annually on the first $1 Million.• The portfolio is managed on a discretionary basis by Trey
Haydon, Morgan Keegan Atlanta.Haydon, Morgan Keegan Atlanta.• For more information please call 404-240-6700.
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
Disclosure
Morgan Keegan & Company, Inc. Member FINRA, SIPCNot FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency