The general strategy behind this and all equity portfolios managed by AWM is sector rotation coupled with macroeconomic analysis. Sector rotation involved over, equal, or underweighting the various sectors of the economy, depending on the perceived future prospects for each. For example, if the economy is expected to move from recession to recovery, we will overweight those sectors of the economy that tend to outperform going into a recovery and will underweight or possibly zero-weight those that tend to be more defensive (do better during recessions). In addition, we pay special attention to commodity-related sectors, such as energy and materials, and will also own securities that provide exposure to commodities, such as commodities ETF’s (Exchange Traded Funds).

The performance figured provided for this portfolio do not include any dividends that might have been paid by stocks held, and do not include any commission charges that would have been incurred. The comparitive S&P 500 performance figures also do not include dividends or commissions. Additionally, we have not considered tax implications of the timing of transactions in this model portfolio, although we use a last in, first out approach when selling existing positions. Attention has been paid to the relative weightings of each position in this portfolio, with a general maximum exposure to any single position of five percent at the time of purchase. We will hold cash at times when we feel the market is overvalued, and may add long positions in securities that provide short exposure to sectors, commodities, or markets.

The AWM Model Growth Portfolio is intended as a tool to help clients visualize the structure and potential performance of the equity component of their personal portfolio managed by Allen Wealth Management. Investors should not assume that, should they choose to invest with AWM, that their individual performance will be identical to this model. Rather, this model simply offers an example of what a typical portfolio might resemble. Performance will, of course, vary, depending on the timing of initial and ongoing purchases and sales of securities within each client’s portfolio.

Those of you who read my commentaries and research will notice that the changes to this model portfolio closely match my stated recommendations. For example, I wrote a detailed research piece entitled, “The Case for $20 per Barrel Oil,” published on June 30, 2008. On the same day, I “sold” all stocks in the energy sector. You will find consistency with all of the changes to this model portfolio from its inception.

For more information about The AWM Model Growth Portfolio, please call 805.898.1400, or email us at:

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