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 16

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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
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Pay attention to the Stock Market. It is
important to you!
The good news is youll live longer
The bad news is youll outlive your money
-The Wall Street Journal
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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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Approach the market the way a general would
approach a battle!

• Have a plan
• Choose your soldiers well
• Get the lay of the land
• Monitor the battle
• Have a plan of retreat

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Five point guide to investment success

• Pick a stock that interests you
• Apply technical analysis for evaluation
• Determine your risk/reward tolerance
• Monitor your investments
• Establish the right broker/client relationship or
  money manager relationship

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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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Step 2

• Apply technical analysis for evaluation

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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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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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The Trinity 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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Accumulation
Progression
Distribution
Reversion
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
10,984
10,753
1,229
1,170
9,000
1,000
768
7,197
Nasdaq Composite Index
2,191
2,000
1,600
1,108
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The Strategy Index SP 500August 2005
October 2005
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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
Uptrend Broken
Sideways Trend Broken
Downtrend Broken
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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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Birkelbach Management Corp.since 1974
We seek Superior Performancethrough our
Proprietary Methodologywhile considering both
Financial as well as Corporate Sustainability
issues.
Invest in your values Listen to your Heart
your Brain
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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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Performance Disclaimer

• The back tested results are hypothetical, not
  real. No inferences should be drawn with regards
  to future results based on these hypothetical
  returns.
• The performance information reflects deduction of
  brokerage commissions.
• The client should not assume anything about the
  advisors competence based on model results
• The results of the model do not represent actual
  trading. They may also not reflect the impact
  that material economic and market factors might
  have had on advisers decision-making if adviser
  were actually managing client money.
• The benchmark used throughout for performance
  comparison of our results is the SP 500 and may
  be indicated as market at some places in this
  presentation.
• The model does not include cash dividends or the
  reinvestment of cash dividends and other earnings
  if any.
• The model does not correspond directly to the
  results achieved by any actual client account at
  Birkelbach Investment Securities Inc.
• Client Suitability objectives with risk
  considerations would be used to address the asset
  allocation process.
• Actual results would depend on overall stock
  market performance and returns generated by the
  individual holdings.
• There is no guarantee of results. The client may
  lose a part or all of his investments.
• The securities bought in the model portfolio have
  been solely picked up based on a combination of
  our social screens, qualitative analysis,
  quantitative analysis including use of the
  Strategy Index, technical analysis and other
  methods deemed applicable by the advisor. They
  may or may not represent the advisors
  recommendations to already existing clients at
  Birkelbach Investment Securities Inc.

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Model Growth Portfolio Returns

• Shown above are portfolio (fully invested)
  returns achieved by back testing the model on a
  weekly basis from June 2000 to June 2005.
• 1 Year Cumulative Returns Growth Portfolio Up
  15.32 (post commissions) SP 500 Up 6.22
• 3 Year Cumulative Returns Growth Portfolio Up
  48.45 (post commissions) SP 500 Up 21.39
• (Annualized 14.1 vs. 6.7)
• 5 Year Cumulative Returns Growth Portfolio Up
  37.50 (post commissions) SP 500 Down 16.10
• (Annualized 6.6 vs. -3.5)

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Model Aggressive Growth Portfolio Returns

• Shown above are portfolio (with up to 30
  periodic cash) returns achieved by back testing
  the model on a weekly basis from
  June 2000 to June 2005.
• 1 Year Cumulative Returns Aggressive Growth
  Portfolio Up 34.47 (post commissions)
  SP 500 Up 6.22
• 3 Year Cumulative Returns Aggressive Growth
  Portfolio Up 68.48 (post commissions)
  SP 500 Up 21.39 (Annualized 18.9 vs. 6.7)
• 5 Year Cumulative Returns Aggressive Growth
  Portfolio Up 44.44 (post commissions)
  SP 500 Down 16.10 (Annualized 7.6 vs. -3.5)

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Growth Portfolio Equity Style Box
Diversified across Sectors, Market Caps, and
Value-Growth Spectrum
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In Q3 2005

• Model Growth Portfolio achieved 5.84 cumulative
  returns
• (before commissions)
• Model Aggressive Growth Portfolio achieved 6.15
  cumulative returns with upto 30 cash
  periodically (before commissions)

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Current Market Assessment
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1 Year Price History SP 500 Index (09/1/2004
09/28/2005)
1245
1232
1185
1140
1090
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1 Year Price History Dow Jones Industrial
Average Index (09/1/2004 09/28/2005)
11,000
10,750
10,650
10,150
9,960
9,678
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1 Year Price History NASDAQ Composite Index
(09/1/2004 09/14/2005)
2220
2165
2040
1890
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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) 1,170 768 402 402 1170
1,572 Projected Goal? (1,572 31) Small Head
and Shoulders Formation (2002 2003) 1,000 768
232 232 1000 1,232 Projected goal
completed 2005
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The NASDAQ Composite Index
Giant Head and Shoulders Formation (2001
2005) 2,000 1,108 892 892 2000
2,892 Projected Goal? (2,892 45) Small Head
and Shoulders Formation (2002 2003) 1,600
1,108 492 492 1600 2,092 Projected goal
completed 2005
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Birkelbach Management Corp.
www.InvestmentValues.biz
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It is important how you live your life, how you
earn your money, how you spend your money and
How you invest your money
Hold yourself to a higher standard Listen to
your Heart your Brain