Gains Continue into the Fourth Quarter

During the most recent quarter, the S&P continued its impressive rise and advanced 6.02%. Throughout the quarter, our proprietary models remained fully invested (with the exception of a 3 day partial sale out of Emerging Markets in some portfolios). In fact, we have remained fully invested in US and Developed International stocks since we entered the markets in late March of 2009. Added to the gains of the past two quarters, this year has produced the best returns among many of our models since we started the company 14 years ago. Returns for 2009 ranged from 54.86% for our Emerging Markets model to 34.52% for Toews Aggressive Growth to 24.09% for our mo re conservative Balanced model.

The chart below shows the returns for the IRMS Aggressive Growth portfolio to illustrate the effect of our management over the past two years. This portfolio is 100% equity. Other portfolios that are less aggressive may have had returns which are lower due to a higher bond allocation and other factors (please refer to your attached statement).

Results above show performance for the Toews IRMS Aggressive Growth Portfolio to illustrate the effect of Toews management on US and Intl. Stocks. Performance of individual accounts will vary based on your investment risk profile and your specific investment funds. For your individual account performance, please refer to your statement included with this commentary.

Can the Stock Market Continue its Rise in 2010?

Pundits have disparate projections for the stock market in 2010. A survey of 12 investment strategists in Barron’s predicted on average that the stock market would increase by 12% in 2010. However, prominent investor and PIMCO CEO Mohamed El-Erian warns that stocks are on a “sugar high,” and that weakened US consumers may lead to a decline in economic growth and the US stock market.

Our system is “market agnostic,” which means that we don’t make calls about market direction. If themarket continues to move higher, our system is designed to remain invested in stocks. However, our target exit level for US and International stocks has adjusted up to within several percentage points of current market prices. That means that the risk of loss in our portfolios is relatively smaller than it was earlier in 2009 in the nascent stages of this market rise.

Having a target sell level that attempts to limit losses provides us a competitive advantage over other
investment strategies. If the stock market continues to advance, we’ll continue to participate even if that rise isn’t justified by market fundamentals. Sugar high or not, we’ll gladly take what market gains we can get.

With regard only to the performance of our investors ’ portfolios (and apart from the considerable global implications of significant market losses), we “don’t care” if the markets move higher or lower. As we’ve just seen over the past two years, significant losses produced an opportunity for gains during the recent stock market rebound. If investors’ worst fears are realized and the stock market begins to sink once again, we hope to be in a position to produce additional gains in the subsequent market rebound.

Winning by Not Losing

We have two objectives with our management strategy*:

1. Provide above inflation returns for our investors
2. Attempt to limit losses

Avoiding big losses profoundly affects investor’s portfolios and their lives. Avoiding a majority of the
losses last year has allowed many of our investors to continue with their savings and retirement plans intact. Incorporating a loss avoidance strategy also provides investors with the confidence that they need to stick to their investment strategy despite the many challenges confronting our economy. We hope that you find some peace of mind knowing that our investment strategy is actively attempting to avoid losses in order to further your goals.

Disclosure
Prior performance is no guarantee of future results and there can be no assurance, and individuals should not assume, that future performance of any of the portfolios referenced will be comparable to past performance.

There can be no assurance that Toews will achieve its performance objectives.

This document refers to the performance of the majority of Toews portfolios to illustrate the effect of Toews management on US and intl. stocks and high yield bonds. Performance of individual accounts varied based on the client’s investment risk profile and their specific investment funds. For your individual account performance, please refer to the enclosed quarterly statement or the quarterly statement recently sent you. In addition, not all model portfolios were referenced in this letter. It is not, nor is it intended to be, a comprehensive accounting of Toews asset management. There are other portfolios that Toews manages that performed differently than what is referenced in this letter.

This article may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.”

This article is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice. Please contact your investment adviser, accountant, and/or attorney for advice appropriate to your specific situation.

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