1. Tactical Alpha Portfolio
March 2011 Update
Trey Haydon
Vice President
Portfolio Manager
404-240-6700
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
2. Disclosure
The information contained in this report is based on sources considered to be reliable but is not
represented to be complete and its accuracy is not guaranteed. This report is designed to provide
commentary on market strategy and the opinions expressed reflect the judgment of the author as of
the date of publication and are subject to change without notice. This report does not constitute an
offer to sell or a solicitation of an offer to buy any securities. Morgan Keegan & Company, Inc., a
subsidiary of Regions Financial Corporation and its officers, directors shareholders, employees and
Corporation, officers directors, shareholders
affiliates and members of their families may have positions in these securities and may, as principal or
agent, buy and sell such securities before, after or concurrently with the publication of this report. In
some instances, such investments may be inconsistent with the opinions expressed herein. An employee
y p p p y
of Morgan Keegan & Company, Inc. may be a member of the Board of Directors of companies referred
to in this report. Morgan Keegan & Company, Inc. may, from time to time, perform or solicit investment
banking or other services for or from a company, person or entities mentioned in this report. The
banking ffili t f Regions Financiall C
b ki affiliates of R i Fi i Corporation may serve or may h served as llenders t any of
ti have d d to f
the companies or securities mentioned in this report. The securities and other investment products
described in this report are: 1) Not insured by the FDIC, 2) Not deposits or other obligations of, nor
guaranteed by Morgan Keegan & Company, Inc., Regions Financial Corporation or any of their
affiliates, 3) Subject to investment risks, including possible loss of the principal amount invested.
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
3. 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, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
4. Last Secular Bear (1966 – 1982)…
Not a good environment for “buy and hold” investing.
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
5. Win by Not Losing
S&P Average Annual
Return 1990-2010 6.23%
Your Average Annual Your Average Annual
Return would have 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
Return would have
R t ld h
If you missed the been
Best and Worst 10 Days 6.55%
Best and Worst 20 Days
y 6.81%
Best and Worst 30 Days 6.90%
Best and Worst 40 Days 6.85%
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
6. Tactical Alpha
Methodology
1. Global allocation portfolio that can invest across 6 major asset
classes
1. US Equity
2. International Equity
3. Fixed Income
4. Currencies
5. Commodities
6. Money Market (Cash)
2.
2 Relative Strength analysis across 1,000+ ETFs representing the 6
1 000+
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.
1 33% i th strongest asset class (Leg 1)
is the t t t l (L
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 Strength
5. Maximum of 66% Cash allowed in Bear Markets
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
7. 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
Jan 2000 to June 2003 to Jan 2008 to Mar 2009 to
Asset Class June 2003 Jan 2008 Mar 2009 Sept 2010
q y
US Equity 137 616 0 264
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, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
8. Trading history for the portfolio
Asset Classes emphasized and dates of Portfolio Changes
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
9. Tactical Alpha
Current Holdings
March 31 2011
Name Ticker % Weight
Rydex S&P Equal Weight RSP 28.61
PowerShares DB Sil
P Sh Silver DBS 17.53
17 53
PowerShares DB Agriculture DBA 15.9
First Trust Dow Jones Internet Index FDN 7.89
First Trust Consumer Disc AlphaDEX FXD 7.49
First Trust NASDAQ-100-Tech Index QTEC 7.21
First Trust Materials AlphaDEX FXZ 6.95
First Trust Financials AlphaDEX FXO 6.67
Default Cash 1.75
1 75
Total 100
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
10. Tactical Alpha
Performance
Through March 31 2011
Results are gross
Annual Returns 2007 2008 2009 2010
Tactical Alpha 7.97
7 97 -9 17
9.17 23.40
23 40 12.35
12 35
SP500 5.49 -37.00 26.46 15.06
Monthly
Returns Jan-11 Feb-11 Mar-11
Tactical Al h
T ti l Alpha -1.81
1 81 2.28
2 28 0.93
0 93
SP500 2.37 3.43 0.04
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
11. 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.
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
12. 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.
• Complete t
C l t transparency of holdings through the Morgan
f h ldi th h th M
Keegan Client website.
• Client will receive a monthly statement and quarterly
performance reporting
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.
• For more information please call 404-240-6700.
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency
13. Disclosure
Morgan Keegan & Company, Inc. Member FINRA, SIPC
Not FDIC Insured | May Lose Value | No Bank Guarantee | Not a Deposit | Not Insured by Any Government Agency