ARL Advisers presentation

Dear Fellow Investor:

I have entered the asset management business. My company, ARL Advisers, LLC, is a registered investment advisory in the State of Kentucky, and I am seeking your business.

With all the options out there, why consider what I have to offer?

First, I like to think that what I do is unique, but not special. I will not be selling you hype or the latest and greatest. My methodology is driven by my own research and the data, and all investing decisions are objective. Second, my market edge is the ability to use my computer, and I level the playing field even more by investing in markets not companies. Third, I put a great emphasis on risk management as it is one of the few aspects of the markets that I can control.

Please take 15 minutes to review my presentation. Here I outline my approach to the markets, and the types of portfolios that we customize for our clients. More importantly, you will understand what I have been doing for the past 10 years of my life, and I hope you will come away with the notion that I am committed to providing you with the best service possible.

As you review the material, ask yourself these three questions: 1) what was my financial plan for the past 10 years?; 2) how will I navigate the markets in the next 10 years?; 3) what is my plan to capture new opportunities and reduce risks in the future? I don’t have a crystal ball nor do I need one. However, I do have a plan and a methodology that should capture the major themes. My emphasis is on a disciplined strategy. In essence, I am offering highly stylized, institutional quality portfolios but without the churn of excessive trading and without the high fees.

I look forward to talking to you soon, and thank you for your time.

Guy

“See why we are different.”[email protected]

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Key Pointsstrategic asset allocation is superior to passive asset allocation

strategic asset allocation produces consistent returns while protecting against losses

ARL Advisers, LLC is replicating a strategy that is commonly employed by major hedge funds and endowments


Key Points ARL Advisers, LLC uses proprietary models to allocate

investment funds toward asset classes with the highest potential for appreciation and away from asset classes with greater potential for loss

funds are allocated across a breadth of alternative asset classes – you are not limited to stocks and bonds

all models are quantitatively derived from fundamental and technical inputs


Key Pointsemphasis on a disciplined strategy

emphasis on money management

emphasis on risk management

emphasis on investing not trading


INTRODUCTION

goals

suitability

universe of assets


my goal

is to make you money!

is to invest for long-term returns while managing risk is to outperform the broad stock markets over the full market cycle (peak-to-peak or trough-to-trough) with less risk than experienced by passive approaches


suitabilityintended for long-term investors following a disciplined saving and investing program

individual investors institutional investorsinvestors seeking growth of income and capital preservationtax deferred or taxable accounts


universe of assetstraditional

US equity ETF’sBond ETF’sSector ETF’s

non-traditionalForeign developed equity ETF’sForeign emerging market equity ETF’sInternational Bond ETF’sREIT ETF’sCommodity ETF’sDollar/ currency ETF’s


The Strategy

Asset allocation that is strategic, balanced, and targeted


the benefits of passive asset allocation are well known*

asset allocation reduces portfolio volatility without sacrificing returns

ability to profit in any economic environment

*Gibson, Roger C., Asset Allocation: 4th Edition, (2008)

Darst, David H., The Art of Asset Allocation: Principles and Investment Strategies For Any Market, Second Edition, (2008)

Ferri, Richard A., All About Asset Allocation, (2005)

Bernstein, William, The Intelligent Asset Allocator: How To Build Your Portfolio To Maximize Returns and Minimize Risk , (2000)

Swensen, David, Unconventional Success, A Fundamental Approach To Personal Investment, (2005)

Dalio, Ray, “Engineering Targeted Returns and Risk”, (2005)

Merriman-Cohen, Jeff, “The Perfect Portfolio”, (2003) click here fornext slide

then came 2008when most major assets became highly correlated


A Better Way!!!


Step 1: strategic asset allocation

tactical or strategic asset allocation directs funds toward asset classes with the highest potential for appreciation and away from asset classes with greater potential for loss

proprietary, quantitative models are utilized to generate buy and sell signals

models utilize fundamental and technical inputs


Step 2: risk management

risk management is achieved through a balanced portfolio that it is constructed from diversified, non-correlated assets

the diversified, non-correlated assets and money management strategy will seek to mitigate risk without decreasing returns


Step 3: targeted returns

each investor has their own level of acceptable risk and their own expectations for returns

through the selection of different assets and the use of a money management strategy, the return/ risk level is targeted for each investor

level of return correlates with level of risk


Portfolio Examplesthese are hypothetical portfolios based upon historical data

commissions , trading slippage, and taxes are not considered

for back testing purposes, portfolios may use index data


Conservative PortfolioGoal: earn return = to long term returns of SP500 with capital preservation

Assets: SP500, Bonds, Utilities, Gold

Allocation: SP500(25%), Bonds (30%), Gold (20%), Utilities (25%)

Money Management: No rebalancing, go to cash if asset on sell signal

When in cash, money earns interest at commercial paper rate click here for

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Conservative Portfoliosince November, 1991, this strategy had a CAGR of 8.09%

$100,000 becomes $453,208

the maximum drawdown (loss) was 8.34%

the strategy averaged 6 round trip trades per year

the strategy was invested 100% only 25% of the time

the strategy had only 1 or no investment position 33% of the time


Conservative Portfolio : equity curve v. SP500


Drawdown is the peak-to-trough decline (in percentage terms) of an

investment, and it is measured from the time a retrenchment begins to when a new high is

reached. Drawdown is a measure of risk.

Conservative Portfolio: drawdown


Conservative Portfolioconsistent returns

capital preservation

low volatility

periods of high cash

minimal churning


Broad Market PortfolioGoal: earn return > SP500 with significantly reduced volatility

Assets: SP500 sector ETF’s, REITs, Foreign Developed, Emerging Market, Treasury Bonds

Allocation: based upon # of sectors/ assets on buy signal

Money Management: rebalance weekly if new buy signals


Broad Market Portfoliosince November, 2001, this strategy had a CAGR of 15.27%

$100,000 becomes $430,312

the maximum drawdown (loss) was 10.58%

the strategy averaged <50 round trip trades per year

the strategy had > 75% of its funds invested 56% of the time

the strategy was in 100% cash 26% of the time click here fornext slide

Broad Market Portfolio: equity curve v. SP500



Broad Market Portfolio: drawdown

Broad Market Portfoliobroad exposure to domestic markets at the sector level

exposure to emerging markets and developed foreign markets

diversified

bond exposure in times of market duress

superior reward to risk

minimal churningclick here fornext slide

Targeted ReturnsWith multiple assets available and with various money management schemes, a portfolio can be designed to suit your needs

Portfolios designed from conservative to aggressive

Portfolios designed to be long and short the markets

Portfolios designed to have high or low cash levels


On the use of models and back testing to “predict” the future:

past performance does not ensure future results

there is no assurance that ARL Advisers, LLC will achieve its investment objectives

however….


you cannot understand the present if you don’t know what worked in the past

key to superior long-term returns is to take investment opportunities when the evidence suggests high return/risk tradeoffs on average, and to avoid situations when the evidence suggests low return/risk tradeoffs on average

back testing puts an emphasis on a disciplined strategy and ensures the conviction to execute the strategy


ARL Advisers, LLC: the service$50,000 minimum investment

fees based on assets under management

all funds held by 3rd party custodian

daily access to account via internet

monthly statements

quarterly reports


Guy M. Lerner, MD

managing partner of ARL Advisers, LLC

licensed investment adviser, Series 65, 2007

founder TheTechnicalTake blog, 2004 to present

featured columnist with RealMoney.com and TheStreet.com, 2004 to 2006

routinely published in some of the most widely read financial publications

marquee speaker at financial seminars

for 20 years, has practiced as a pediatric anesthesiologist in some of the top universities and hospitals in the country

Bachelor of Arts in Literature, University of Pennsylvania, 1981

Doctor of Medicine, University of Pittsburgh School of Medicine, 1986


ARL Advisers, LLCasset allocation that is strategic, balanced, and targeted

portfolio diversification through innovative strategies

independent investment research

discipline and conviction

integrity

leads to…..


Performance

competitive risk adjusted investment returns

ability to profit in any economic environment

reduced portfolio volatility


Past performance is not an indication of future performance and there can be no assurance that ARL Investment Advisers, LLC will meet its investment objectives. The information contained in this presentation is neither an offer to sell nor a solicitation of an offer to buy an interest in ARL Advisers LLC. Any such offer or solicitation can be made only be means of a confidential private offering memorandum and only in those jurisdictions where permitted by law.


THIS DOCUMENT IS INTENDED SOLEY FOR USE BY FINANCIAL ADVISORS AND THEIR CLIENTS OR BONA FIDE PROSPECTS WHO ARE ACCREDITED INVESTORS. THIS DOCUMENT MAY NOT BE REPRODUCED OR DISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON NOR MAY IT BE USED IN PUBLIC SEMINARS, NEWSLETTERS OR ADVERTISEMENTS.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. ALL DATA CONTAINED HEREIN HAS BEEN OBTAINED FROM RELIABLE SOURCES, HOWEVER ARL ADVISERS, LLC CANNOT BE REPONSIBLE FOR ERRORS AND OMISSIONS FROM SUCH SOURCES. THIS DOCUMENT IS NEITHER AN OFFER TO SELL NOR A SOLICITAION OF AN OFFER TO BUY UNITS OF LIMITED PARTNERSHIP INTERESTS IN THE ARL ADVISERS, LLC. AN OFFER OF SUCH INTEREST CAN BE MADE ONLY BY MEANS OF THE CONFIDENTIAL OFFERING MEMORANDUM.YOU AND YOUR FINANCIAL ADVISOR SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN ARL ADVISERS, LLC. YOU SHOULD BE AWARE OF THE RISKS IN THE FINANCIAL MARKETS AND OF INVESTING WITH ARL ADVISERS, LLC

THE CONFIDENTIAL OFFERING MEMORANDA OF THE FUNDS CONTAIN A DESCRIPTION OF THE PRINCIPAL RISK FACTORS, EACH EXPENSE TO BE CHARGED TO THE FUNDS AND A STATEMENT OF THE AMOUNT, AS A PERCENTAGE RETURN AND DOLLAR AMOUNT, NECESSARY TO BREAK-EVEN (THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT).

PROSPECTIVE INVESTORS WILL RECEIVE A DISCLOSURE DOCUMENT WHEN THEY ARE SOLICITED TO INVEST WITH ARL ADVISERS, LLC AND THAT CERTAIN RISK FACTORS BE HIGHLIGHTED. THEREFORE, YOU SHOULD ASK YOUR FINANCIAL ADVISOR OR THE GENERAL PARTNER FOR A COPY OF THE CONFIDENTIAL OFFERING MEMORANDUM AND STUDY IT CAREFULLY TO DETERMINE WHETHER SUCH AN INVSTMENT IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. click here for

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email: [email protected]

phone:502 552 0018

mailing address:ARL Advisers, LLC528 Barberry LaneLouisville, KY 40206

business hours:Monday – Friday, 8 a.m. to 5:00 p.m. EST

websites:www.arladvisers.comwww.thetechnicaltake.com

Economy & Finance

ARL Advisers presentation