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FLIP SIDE

BACK TESTING

We back tested our system using stationary parameters on economic and market data from 1926 through 1992. Going forward our system must adapt to changes as they occur. Which is why we have and will modify our timing parameters within the system, in the event that fundamental changes in the economic, fiscal or monetary systems are enacted.

TOTAL RETURNS
Year	Total Port.	50/50 Port.	Income Port.	Stock Index	Bond Index	Cash Index
1926	11.62	8.85	6.08	11.62	6.08	3.27
1927	37.49	21.52	5.54	37.49	5.54	3.12
1928	43.61	23.63	3.65	43.61	1.59	3.56
1929	-8.42	-1.84	4.75	-8.42	5.05	4.75
1930	4.75	5.98	7.21	-24.90	7.16	2.41
1931	-2.16	-2.16	-2.16	-43.34	-2.16	1.07
1932	9.51	9.51	9.51	-8.19	9.51	0.96
1933	17.86	11.34	4.82	53.99	4.82	0.30
1934	10.69	10.69	10.69	-1.44	10.69	0.16
1935	7.92	7.92	7.92	47.67	7.92	0.17
1936	4.35	4.35	4.35	33.92	4.35	0.18
1937	-15.85	-6.94	1.98	-35.03	1.98	0.31
1938	36.51	21.36	6.20	31.12	6.20	-0.02
1939	4.33	4.33	4.33	-0.41	4.33	0.02
1940	7.38	5.25	3.11	-9.78	3.11	0
1941	1.28	1.28	1.28	-11.59	1.28	0.06
1942	26.32	14.25	2.17	20.34	2.17	0.27
1943	25.90	14.36	2.82	25.90	2.82	0.35
1944	19.75	11.29	2.83	19.75	2.83	0.33
1945	36.44	19.66	2.87	36.44	2.87	0.33
1946	-8.07	-3.41	1.25	-8.07	1.25	0.35
1947	5.71	2.74	-0.23	5.71	-0.23	0.50
1948	5.50	3.41	1.32	5.50	2.65	0.81
1949	18.79	9.95	1.10	18.79	2.67	1.10
1950	31.71	16.46	1.20	31.71	1.20	1.20
1951	24.02	12.76	1.49	24.02	-0.71	1.49
1952	18.37	10.02	1.66	18.37	2.29	1.66
1953	-0.99	0.42	1.82	-0.99	3.29	1.82
1954	52.62	27.83	3.04	52.62	3.63	0.86
1955	31.56	16.09	0.62	31.56	-0.25	1.57
1956	6.56	4.51	2.46	6.56	-2.66	2.46
1957	-10.78	-1.50	7.78	-10.78	8.14	3.14
1958	43.36	20.89	-1.58	43.36	-1.62	1.54
1959	11.96	7.46	2.95	11.96	-0.59	2.95
1960	0.47	2.91	5.35	0.47	10.82	2.66
1961	26.89	14.89	2.89	26.89	2.89	2.13
1962	-8.73	-1.17	6.40	-8.73	6.40	2.73
1963	22.80	12.69	2.58	22.80	1.83	3.12
1964	16.48	10.01	3.54	16.48	4.30	3.54
1965	12.45	8.19	3.93	12.45	0.50	3.93
1966	-13.90	-4.57	4.76	-10.06	3.12	4.76
1967	11.25	4.40	-2.46	23.98	-1.08	4.21
1968	1.64	1.64	1.64	11.06	3.85	5.21
1969	6.58	6.58	6.58	-8.50	-3.31	6.58
1970	18.92	14.92	10.92	4.01	17.39	6.52
1971	14.31	9.28	4.25	14.31	9.52	4.39
1972	15.59	10.75	5.90	18.98	5.90	3.84
1973	6.56	6.56	6.56	-14.66	3.40	6.93
1974	21.24	14.70	8.16	-26.47	2.63	8.00
1975	2.94	6.58	10.21	37.20	10.21	5.80
1976	22.61	18.75	14.89	23.84	14.89	5.08
1977	-0.25	1.76	3.76	-7.18	1.52	5.12
1978	6.78	6.98	7.18	6.56	2.24	7.18
1979	10.38	10.38	10.38	18.44	1.20	10.38
1980	1.35	1.35	1.35	32.42	1.58	11.24
1981	18.40	18.40	18.40	-4.91	5.71	14.71
1982	49.88	41.85	33.81	21.41	33.81	10.54
1983	22.51	14.76	7.01	22.51	7.01	8.80
1984	4.29	6.29	8.29	3.05	15.01	9.85
1985	25.48	24.62	23.75	32.56	23.75	7.72
1986	16.09	16.44	16.79	16.09	16.79	6.16
1987	2.27	0.78	-0.71	2.27	1.79	5.47
1988	17.94	12.15	6.35	17.94	7.71	6.35
1989	13.76	11.07	8.37	29.17	14.32	8.37
1990	0.08	4.16	8.24	-6.18	8.70	7.81
1991	34.20	25.61	17.01	34.20	17.01	5.60
1992	8.97	8.19	7.40	8.97	7.40	3.29

Avg.	13.73	9.76	5.80	12.25	5.46	3.63

Hypothetical investment of $1,000 on 1-1-1926
$ values on 12-31-1992

TOTAL MARKET PORTFOLIO	$3,166,324
STOCK INDEX	$673,736

50/50 PORTFOLIO	$420,368
BALANCED INDEX	$182,069

INCOME PORTFOLIO	$39,527
FIXED INCOME INDEX	$24,916
Click on portfolio names to view the trades

INDEXES USED

STOCK INDEX:	S&P 90 Index	1926 to 1956
	S&P 500 Index	1957 to 1983
	Wilshire 5000 Index	1984 to 1992

BOND INDEX:	65% 5 year government bonds 35% 20 year High-grade Corporate Bonds	1926 to 1991

	Lehman Brothers Aggregate Bond Index	1992

CASH INDEX:	30 day U.S. Treasury Bills	1926 to 1991

	Average money market mutual fund	1992

BALANCED INDEX:	50% stock index return 37½% bond index return 12½% cash index return

FIXED INCOME INDEX:	75% bond index return 25% cash index return

EXPLANATION OF RETURNS

* All index growth figures in dollar terms are for illustration purposes only. You cannot invest directly in an index, it must be done through an index fund.

* All trades and returns were based on closing prices.

* All returns include reinvestment of dividends and exclude any tax liabilities/transaction fees.

* 50/50 Model Portfolio was rebalanced at 50% growth and 50% income at each year-end.

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5 YEARS ENDING 12/31/07

Focus Portfolio 74%

Total Portfolio 69%

50/50 Portfolio 44%

Income Portfolio 22%