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PD RTFØR MU LAS.

FORMULAIC TRENDING MONEY MANAGER

The Formulaic Trending Monthly Recap
Mayll,2012: Overall RAM®
RAM® Score is a proprietary “market-trending” tool that takes into account several dynamic components related to the U.S. markets and economy. It features a core baseline which allows for correlation between these multiple components so that they may be added together for an overall Ram® Score. As a market trending tool, we believe that a positive RAM® Score indicates that the odds are stacked in favor of equity investments and a negative RAM® Score indicates that odds are stacked against equity investments. Obviously, this does not guarantee that the market will increase when the score is positive or decrease when the score is negative, but we believe the long term correlation may be a powerful tool for investing... Combining our trending features of RAM® Score with our Portformulas® intricate Formulaic Investing’ Strategies results in a uniquely logical approach to investing that is exclusively available through Portformulas®. TM The overall RAM® Score has decreased from +58.15 last month to ÷40.58 this month... Representing a 17 point decline... The decrease was driven primarily by renewed concerns over European economic issues. Ironically, the United States continues to post generally positive economic and market data despite the mainstream media headlines and focus on Euro zone turmoil (not that the teetering Euro mess is anything to ignore). While it’s been a bumpy ride, the S&P 500 is over 200 points 5t 1 th 4 from its quarter 2011 low with earnings in the Quarter coming in better than expected. In fact, many important indicators are increasing in2Ol2over2Oll... 1. University of Michigan Consumer Sentiment Index Total U.S. Household Employment = Increasing Total U.S. Retail Chain Store Sales = Increasing U.S. Housing Starts = Increasing Total Annualized U.S. Auto Sales Rate = Increasing
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On the flipside, three big headline grabbers have been trumping most ofthe other economic news...
1. JP Morgan made headlines with a $2 billion trading loss... Which is a big deal, but taken in perspective (which the media seldom

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does), investors would do well to remember that JP Morgan has an equity market capitalization of $140 billion. Any way you slice it, that’s a big blunder, but it in perspective it doesn’t seem quite so devastating. As reported in the Wall Street Journal on Monday, May 7, 2012... “French voters elected Socialist Party candidate François Hollande as president Sunday, choosing a national leader who has pledged to shift the burden of economic hardship onto the rich and to resolve the protracted euro sovereign-debt crisis by softening the currentprescription ofausterity.” Keep in mind, the political term “austerity” means a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided. In other words, France wants to soften (or get rid of) “austerity” so that it can act like France again. Ignorance is not bliss and this
does not bode well for the Euro, the U.S. or the markets. U.S. stocks have been pushed downward on worries that Greece may yet exit from the single-currency Euro zone. And the question as to whether that will be the precursor for deeper issues in Spain and other European countries.

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While Europe, in particular, poses significant concerns and questions, most economists seem to agree that there is an unhealthy sky-is-falling emotional reaction gripping the markets and headlin..tht4s-beyonreality or likelihood. Let’s hope the economists are correct. To add more confusion to this month’strends, RAM Score refIethat7oJ7ZiI5temponents are now positive. Therefore, even though RAM declined numerically, the final subcomponent flipped to pos’v-Ist7nflthflias 6 of 7) with RAM Score posting a +40.58.

For more information and educational tools you can visit www.portformulas.net or speak with your Financial Advisor. Best of Investing, Mike Walters, CEO
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Next month I’ll start publishing our new “Index Health Tracker” Portformulas Investing Corporation Formulaic Trending Money Manager TM SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994
www.portformulas.net

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FORMULAIC TRENDING MONEY MANAGER

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PD RTFØR MU LAS.

FORMULAIC TRENDING MONEY MANAGER

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Portformulas Investing Corporation Form ulaic Trending Money Manager TM SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994 www.portformulas.net

PD RTFØR M U LAS.

FcJRMLJLAIC TRENDING MONEY MANAGER

Please note that there are a number of important disclosures that must be considered before investing in Portformulas. Please read the information and disclosures contained in Portformulas’ hypothetical carefully before investing. Any performance figures referenced herein are hypothetical and are not indicative of future results. Purchases and sales of securities within Portformulas’ various strategies may be made without regard to how long you have been invested which could result in tax implications. RAM Score General Disclosure This illustration does not represent any particular Portformula strategy nor is it intended to recommend any Portformula strategy or the RAM Score feature. The information on this page simply attempts to illustrate how our firm’s RAM Score Allocation Management feature operates. This feature can be applied to many Portformula models at no additional cost. RAM Score was not developed until January 201 0. Prior to January 201 0, clients were utilizing RAM Score’s predecessor, RAM. Clients utilizing RAM may have had different results than clients utilizing RAM Score. RAM Score movement prior to 201 0 is hypothetical and based on retroactive application of RAM Score’s indicators to market and economic conditions existing at the time. Portformulas was not managing assets prior to 2007. It is important to understand that RAM Score is only a tool designed to assist our firm’s management of your account. RAM Score does not guarantee any specific results or performance and even with RAM Score on your account, it is possible that your account will lose value. RAM Score moves assets into or out of the market based on various economic and market indicators. It is possible that the market will move positively while you are not invested or negatively while you are invested, resulting in losses. Any Portformula strategy may underperform or produce negative results. This illustration utilizes the S&P 500 index because it is a well-known index and provides a recognizable frame of reference. Indexes such as the S&P 500 are not publically available investment vehicles and cannot be purchased. The S&P 500 has not endorsed Portformulas in any way.

p 0 R T F5R IVI U L A S®

FORMULAIC TRENDING MONEY MANAGER

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Portformulas Investing Corporation Form ulaic Trending Money Manager TM SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994 www.portformulas.net