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Q4 2010 TAM Quarterly


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                                    TAM  CSCA  LOGP  TAM DA  DELLINGER  STL

                         4 t h Quarterly Review 2010
                                          Kevin A. Tuttle – CEO & Chief Strategist

                          Noteworthy News: Top Headlines of Q4 2010

 Wikileaks founder Julian Assange was arrested without          President Obama refused to sign a moratorium halting
  bail, provoking cyber “hacktivists” to ambush Visa (V)          foreclosures though 23 states cited incidents of fraud,
  and Mastercard’s (MA) websites in protest                       alleging banks were “robo-signing” documents
                                                                 FIFA delegated 2018 World Cup hosting country to
                                                                  Russia and the 2022 site to Qatar – making it the first
                                                                  Middle-Eastern nation to host the sporting event
                                                                 All 33 miners were rescued safely after being trapped
                                                                  for 69 days in a collapsed mine in Chile
                                                                 2010 US Census data and electoral seat
                                                                  reapportionment indicates a shift in US population to
                                                                  the South and West
                                                                 The Nobel Economics Prize was awarded to Peter
                                                                  Diamond, Dale Moternsen and Christopher Pissarides
                                                                  for explaining how government regulators and policy
                                                                  impact the economy, specifically the labor markets

 The House and Senate approved Bush Tax Cut extensions          President Obama repealed the military’s Don’t Ask
  for all income levels despite heavy bi-partisan contention      Don’t Tell (DADT) policy, ending the 17-year-old openly
                                                                  gay ban
 Moodys set the tone with Eurozone debt concerns,
  downgrading Ireland, Portugal and Hungary’s credit             Trustee Irving Picard recovered $7.2B from a
  rating                                                          conspirator’s estate to assist swindled investors with
                                                                  losses resulting from the Madoff Ponzi scandal
 Ben Bernanke unveiled the Fed’s plans for QE2, revealing
  $600B of Treasury purchases and an extension of near           American International Group Inc. (AIG) and the
  0% interest rates                                               Treasury Dept. solidified plans to liquidate government
                                                                  ownership and commence repaying bail-out debts in Q1
 General Motors (GM) is no longer deemed “Government             of 2011
  Motors” when their IPO raised $20.1B in capital, ranking
  as one of the largest IPO’s in US history                      Pfizer (PFE) CEO, Jeffrey Kindler, unexpectedly resigned
                                                                  after less than 5 years leaving Ian Read to take over
 The US Treasury Department liquidated their remaining
  2.4B shares of Citigroup (C) common stock                      The House and Senate approved the “First Responders”
                                                                  bill, providing health care for the first responders of the
 A 6-month moratorium on deep water drilling in the Gulf         9/11 attacks
  of Mexico was lifted by the Obama Administration
                                                                 Republicans seized control of Congress following a vicious
 North Korean dictator Kim Jong Il appointed his                 election cycle, resulting in the largest party power shift in
  youngest son, Kim Jong Un to succeed him                        nearly six decades                                                                                           Page 1
                         The ‘End of the End’ or just a ‘Mountain of Evidence’?

  To All TAM/CSCA Clients:

   With the connotation signifying not only a pleasantry, we launch this report with the words; “Happy New Year!
   It is time for Joy and Celebration. ” To a large extent this sentiment is a continuation of a term we penned in
   last quarter’s missive, “The beginning of the End.” Here we highlighted our perspective standpoint and
   elaborated on the following topics and potential outcomes…

               High volatility in equities potentially contributing to eventual stability
               The Fed’s symposium’s ambition
               Interest rate manipulation benefiting the yield curve (borrowing stimulation)
               Merger & Acquisition activity
               November’s mid-term election – potential gridlock and effect
               Institutional Investor – not consumer- confidence

   This report, by expanding on the prior, will not only enhance the optimistic probabilities; but provide supporting
   data (Evidence:) to reinforce the theory of a much-needed sustainable bullish stance – the first in many years.

     Frustration + Exodus = Productivity

   Without a doubt 2010 was as frustrating for
   investors as a “Pyromaniac in a Petrified Forest.”
   Interestingly enough, notwithstanding its decent
   January beginning, the sharp 17% downtrodden and
   eight additional months of non-return based
   extreme volatility will be documented in the
   proverbial ledger as being “Productive;” frustrating
   nevertheless, but productive. Pointing to the ole’
   adage, “Frustrating the majority is the Markets’
   primary goal.”


        One only needs to look at the statistics to
        comprehend the level of frustration. 2010
        was the second greatest monetary exodus
        out of equity mutual funds in 30-years;
        second only to 2008’s financial implosion
        period.                                                                                     Page 2
   For a contrarian, which TAM is, this becomes good news as true contrarians tend to believe the majority of
   individual investors make emotional, not rational, decisions and as a whole and tend to continually be wrong at
   extremes (crowd behavior).

   As the post-election results became a reality and the year embarked on its wind up, the lack of investor
   confidence began to abate. Whether it was gridlock (Republican’s taking the house and nearly the Senate) or
   President Obama moving toward the center; the results were certainly “buy-inspiring” for investors and should
   continue to be a bullish catalyst for 2011.

     Fiscal & Monetary Policy:

   To placate the looming “Double-Dip” potential even further, Fiscal & Monetary Policy also began to take hold.
   “Just keep pumping the Primer,” yelled a man wearing a tuxedo and holding an empty bucket under a dry spigot.

   Fiscal: Quantitative Easing Take Two (QE2) – “ACTION!”

   So here’s the 64 Thousand Dollar Question; “Is Government
   spending the only thing keeping the economy afloat and is
   the ‘Primer’ doing what it’s intended to do?” First things first;
   The Government’s Plan – keep things in motion until the
   engine can self-propel; after which, pay the primer fuel back
   with a full-running, self-sustaining engine. Theory sound?
   Maybe, if the engine is not seized from the get-go.

   So far, so good – except for the simple fact no one is paying
   any attention to the amount of the ‘primer fuel’ being pushed
   into the system – 3 Trillion to be exact. (2.3T with round 1
   and 700B for round 2) Look at it this way… this equates to
   government spending in excess of… $8.2B/Day; $341M/Hour;
   $575K/Second. That’s one hell of a Primer.

   Add this to the “Monetary” policy forces in place – adjusting the Fed Fund Rates and buying treasuries to
   manipulate the interest rates – we’ve got another feather (or whole bird) in our Equity Bull Cap. These
   monetary moves will undoubtedly create other consequences – discussed in additional past missives – but our
   objective in this report is one of “Market Action” not long-term opinions on “Right or Wrong”.


                 Merger Mania was the first sign of true economic recovery. Companies (42% of
                 investment-grade companies to be precise) have been aggressively taking
                 advantage of the lowest borrowing cost on record to sell debt in order to finance
                 acquisitions and their own share repurchases (manufacture earnings).                                                                                      Page 3
     The Business Cycle & Productivity:

   To comprehend our current location within the Business Cycle we have to look at the typical chronological order
   of corporate spending while exiting a recession.
         1. Share Repurchase
         2. Acquisitions
         3. Inventory Rebuild
         4. Capital Expenditure
                Funding Productivity Increases
                Modernization, typically through Technology

   Having already discussed #1 & #2, Corporate America
   continues to remain flush with 1.2T of capital looking for a
   home. That being said, #1 & #2 do almost nothing for the
   progression along the Business Cycle Path, other than
   tighten corporate balance sheets. The rubber truly meets
   the road in a business cycle with the onset of spending #3 &
   #4 (Inventory Rebuild & CAPEX – Capital Expenditure).

     The onset of a Business Cycle Upturn
         1. Inventory Rebuild (Spending #3)
               Leading expansion
         2. Capital Investment Cycle (CAPEX) (Spending #4)
               Industry consumption to increase productivity (technology)
         3. Employment
         4. Consumer consumption

     Inventory Rebuild (2010):

   Because of the nature of a recession this can be very difficult to evaluate in the lifeline of a business cycle, yet
   still possible. When first entering the business (20 some years ago) I read an excerpt from Peter Lynch on the
   Business Cycle. He portrayed to know the “Greatest Single Economic Forecaster” over the last 100-years. He
   called it the “ultimate” industrial material and claimed its price has led the global macro-economic expansions
   and contractions for over 100-years. It’s…
            Used in industrial, electrical, transportation, coinage, preservative, restoration, technology
            The oldest metal used by mankind
            Atomic # is 39
            Consumed through the human body via (Vegetables, legumes, nuts, grains, fruits, drinking
             water and even chocolate)
             o Sometimes referred to as the Fountain of Youth” element                  Evidence:
          Copper!
                                                                                        From October to December
   With its vast array of uses (specifically in the transportation & building           copper prices have increased
   industries) the demand (price) increases as activity picks up (inventory             nearly 30%
   rebuild). Since stumbling upon this excerpt as a greenhorn, I’ve never
                                                                                           ($3.50/lbs to $4.50/lbs)
   steered away from the theory.                                                                                          Page 4
     CAPEX (Productivity - 2011):
   CAPEX, in my humble opinion, is the next and most important leg of “The End of the End.” This is where, if the
   Fed’s theory of “Priming the Pump” is correct, the engine should kick on. Corporate spending on capital
   (specifically technology) should, in theory, jumpstart the broader economy. It’s been nearly 12-years since
   there’s been a substantial technology boom and all indications point toward productivity increases stemming
   from technology.

       Evidence: December’s Business Roundtable’s 4th Quarter CEO Economic Outlook Survey found…
           80% of CEOs expect sales to increase within the next 6-months
           60% of CEOs plan to increase capital expenditures (Productivity/Technology)
           45% of CEOs see staff additions in the following 2 quarters (questionable – less than 50% of CEO’s)

                                                                           NDX Technically:

                                                                           It is not only from a fundamental
                                                                           standpoint which technology investing
                                                                           seems most likely; it’s also from a
                                                                           technical standpoint, assuming further
                                                                           progression into 2011. The NDX, at the
                                                                           close of 2010, was pushing against the
                                                                           2007 high and about to embark on a 10-
                                                                           year (since 2001) technical breakout. If
                                                                           this occurs, the probability lies with
                                                                           3,000 being the next stop for this tech
                                                                           laden index (35% higher).

     Double Dip Probability:

   All the empirical evidence not only points to a “Double
   Dip” probability waning, but having actual organic
   expansion possibilities. Nevertheless, Business Cycle III
   & IV (employment & consumer spending) are still only a
   hope & craving for a starving economy. Employment
   could very well take some time.

      Contrary Evidence:
        2.4 Million Manufacturing Jobs have been lost
         (not including construction)
        The first time in history governmental jobs (Fed
         & State) have shrunk
        More than 250K in 2010 alone Unemployment
         still remaining stubbornly close to 10%                                                                                     Page 5
                                                           So we ask…

                                                           “Is a jobless recovery possible and if so, for how long?”
                                                           and “Will the policy measures finally lead to sustainable
                                                           job growth, increase the tax base and be able to pay off
                                                           the “Primer Fuel?”

                                                           The answer can only draw clearer as you hear the
                                                           whispered intro to the 1960’s Twilight Zone…

                                                           “…traveling through another dimension, of not only sight
                                                           and sound, but of mind; a journey into a wondrous land
                                                           whose boundaries are that of imagination…”

   Otherwise stated… our “Weight of Evidence,” both Fundamental & Technical, point to a Happy New Year, while
   additional catalysts remain essential to propel a 30% + Year. For now, considering the Equity Markets tend to
   consistently look 9 – 12 months ahead, the most plausible argument is; The Beginning of a New Cycle. Barring a
   geopolitical event, and if the politicians stay out of the way and don’t make a policy mistake, the probability of
   stocks being higher and having a stronger dollar is highly likely.

   As we enter the New Year we still warrant modest caution as to not step into the same 2010 beginning puddle.
   With advisor sentiment approaching extremes, akin to October 2007, and everyone clamoring “All Clear” we do
   not want to be in the barrage of an initial (January Exuberance) pullback.

     Our Continued Resolve:

   With the onset of a New Year we felt it apropos to recap our management philosophy, discipline & methodology.
   This stems from a statement from the man who ‘Created Management,’ Peter Drucker.

              “There is nothing so useless as doing efficiently that which should not be done at all.”
   We summarize; We will not…
               Mobilize the good news to make it look pretty and impartially extrapolate
               Sell positions doing well for no other reason than having a profit (cut gains short)
               Hold a stock persistently going against the portfolio (limit losses)
               Be swayed by news, rumors, tips or flash movements
               Put all our eggs in one basket (over concentration)
               Project market value based on fundamentals alone
               Portray we are smarter than everyone else
               Abandon our method and discipline
               Act on emotions
               Dissuade from our management mantra of the balance of risk and the enhancement of wealth
                o If you take care of the downside, the upside will eventually take care of itself

              “There are only two lessons to financial success. Lesson number one; Don’t lose money.
                      Lesson number two; don’t forget lesson number one.” – Warren Buffet                                                                                      Page 6
   As always, we at Tuttle Asset Management, LLC (TAM) & Church Street Capital Advisors, LLC (CSCA) are
   grateful for the opportunity to serve as your portfolio manager. We trust these quarterly reports
   continue to keep you informed on the overall portfolios’ returns, strategies and our thought process
   concerning the equity markets. Feel free to contact us anytime.


   The Tuttle Asset Management Team


   Tuttle Asset Management
   201 S. Orange Avenue, Ste. 1510
   Orlando, FL 32801
   (800) 933-0652                                                                        Page 7
   Performance Disclosures:

 All calculated returns are unaudited and net of management fees and transaction costs ● Percent return may differ in individuals’ portfolios
 based on time, amount of initial investment, negotiated management fee and any special instructions by the client for the account ● Interest
 income is based on an average from the current money market yield and non-invested cash for the quarter ● All information provided herein
 is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness ● Beginning
 and ending values do not include non-allowable assets and may differ from the monthly client statement ● Please Refer to Actual Account


 The preceding report was generated at the request of a hedge fund or other managed accounts. The Funds and their managers are solely
 responsible for the content of the report. Tuttle Asset Management, LLC, Merrimac Corporate Securities, Inc. and its affiliates nor Church
 Street Capital, LLC are responsible for the content of the report and have not verified, and make no representation regarding the accuracy or
 completeness of, the information contained therein, including the existence or valuation of positions. The report is not an official monthly
 statement issued by neither MS Howells nor Jefferies & Co.

 The report is only intended for persons or entities that have an agreement to the terms of use with Tuttle Asset Management, LLC, Scottrade,
 Inc. and Church Street Capital Advisors, LLC. This agreement provides additional important information about the report. If you do not have an
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 confidentiality of the web transmission cannot be guaranteed. All users of the website are subject to the "Terms and Conditions".

 The report contains performance data using a methodology authorized by the portfolio manager, but the report's methodology may be
 different from the methodology used to calculate the Fund’s net asset value. Net asset value is defined in the Fund’s documents and are
 determined by the party or parties named in those documents. The numbers contained in the report representing performance or rate of
 return ("ROR") (i) may reflect unverified information provided by the Fund, its manager or directors or their agents, including the existence or
 valuation of positions and (ii) may not reflect all assets of the Funds, such as assets held at Scottrade, Inc. or another prime broker. In addition,
 past performance is not an indicator of future performance.

 The report is for informational purposes only, and the report is not intended for use in calculating the Fund’s net asset value, calculating fees,
 or preparing account statements or financial statements.

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 The Fund is solely responsible for making any required filings with any state or government agency, any self-regulatory organization or
 exchange and for the accuracy of the information contained therein.

 The information provided in the report is not a prediction of investment results, may be hypothetical or theoretical in nature, and should not
 be relied upon to make investment decisions. Information in the report regarding the probabilities that various investment outcomes might
 occur are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Past performance also is not
 an indication of future results. The information presented provides only a range of possible outcomes. The report does not constitute a
 recommendation by Tuttle Asset Management, LLC, Scottrade, Inc. and Church Street Capital Advisors, LLC nor any of its affiliates, or their
 respective officers, directors, agents and employees, to buy or sell a specific security. For more information about the bases and assumptions
 of the calculations used in the report and other explanatory information about the report, please contact your account executive.                                                                                                                   Page 8

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