Zacks Investment Research, Inc. 10 S. Riverside Plaza, Suite 1600 Chicago, Illinois 60606

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1 Zacks Investment Research, Inc. 10 S. Riverside Plaza, Suite 1600 Chicago, Illinois 60606

2 Contents Introduction 2 Section 1: The Mental Aspect 3 Section 2: Investment Philosophy & Trade Selection 4 Section 3: Getting the Most Out of the Reitmeister Trading Alert 6 Section 4: Follow the Leader 7 Section 5: How to Read the Reitmeister Trading Alert Daily Alerts 8 Section 6: How to Read the Reitmeister Trading Alert Daily Summary 9 Section 7: Virtues of Money Management 10 Section 8: Tying it All Together 11 1

3 Introduction: Congratulations on joining the Reitmeister Trading Alert family. The Reitmeister Trading Alert is not a get rich quick scheme. Any person promising overnight riches is a charlatan and doesn t respect the years it took for you to build your nest egg. Instead I am going to show you how to prudently apply the power of the Zacks Rank combined with value investing and a dash of market timing. This blended approach will help us profit no matter what the market throws our way. How have I done for customers since we got started in February 2009? We had a lot of short positions early in the game that actually started out quite well. But as we all know the market rebounded with a vengeance in March Our short positions got clobbered and the value of the portfolio went into negative territory. In April/May I started to believe in the power of the recovery and moved us to a larger long position in the market. Yet by year s end the rise to only +5% for the portfolio was far short of the market s move. I can t erase the poor performance of All I can do is move forward. Gladly the benefits of my investing approach are much more evident in portfolio returns since that rough start. I am confident that the goals of the service will be met going forward and that you will be delighted with the outcome. Please be sure to read this guide from start to finish. In the pages that follow are important tips that will help you get the most out of this service. The more you know, the better your odds of success. Again, welcome to the Reitmeister Trading Alert and I look forward to sharing investment success with you for many years to come. Steve Reitmeister Editor, Reitmeister Trading Alert Executive Vice President, Zacks Investment Research 2

4 Section 1: The Mental Aspect It is important to realize how much investment success is related to what goes on between your ears. There are so many ways to get distracted and to question yourself while trading. You must be in the right frame of mind and have reasonable expectations to achieve success with this or any investment service. So be sure to pay attention to the tips in this section carefully; they will get you headed in the right direction. NOBODY IS 100% PERFECT First of all, there will be losing picks. Probably 40% or more of the trades will be closed for a loss. But if we cut them out early to minimize losses and maximize gains on winners, then we can achieve phenomenal results. A little known fact is that the Zacks Rank, even with its 26% annual return, is only right 56% of the time. We are extremely confident that over time we will produce substantial returns, but it is important that you learn to take the losing picks in stride. TIMELINESS INCREASES ROI So let me ask you a question. Would you rather make 10% or 20% on a trade? Yes it s a trick question. The missing piece of the puzzle is how long each trade was held. So now let s say that the 10% gain was made in 3 months time, which computes to a 40% annual return. Whereas the 20% winner took 2 years to achieve and is really only good for a 10% annual gain. This example solidifies the power of timely stock trading that we will harness with this service. Most often we will only be holding on for 2 to 4 months and stringing together a series of 10%, 20%+ winners. But from time to time we let winners run long enough to net 50% to 100% gains on the trade. 3

5 Section 2: Investment Philosophy & Trade Selection The Reitmeister Trading Alert service will follow hand picked trades by Steve Reitmeister, Editor At Large and EVP of Zacks Investment Research. The best way to understand his investment philosophy and trade selection process is to first understand Steve s background and trading influences, so we asked Steve to share that with you below. VALUE INVESTING AND MY DAD I ve always been around investing. That s because my father is an accomplished Certified Financial Planner who started sharing his investing philosophy with me at an early age. He showed me how to read through research reports and seek out undervalued stocks. I can even remember my first trade when I was 13 years old. He helped me buy shares in a copper mining company, Asarco, for $40 and sold it a few months later for $52. I was hooked. My dad also shared with me the value of a dollar and to not be wasteful. That philosophy transcends household economics as well as investing. For example, why would anyone pay $70 for a $50 shirt? Or even worse, why would you pay $70 for a $50 stock? As a value investor you learn how to uncover $50 stocks trading for $40 or less. And those opportunities exist every day to investors who are prepared to find them. Flash forward to January 1, 1998 I ed the first issue of my Reitmeister Investment Newsletter to 12 people. This was simply meant to be a weekend hobby where I shared my brand of value stock picking with a few friends. But a year and a half later I had over 4000 subscribers and it was clear that this was my calling. ENTER THE ZACKS RANK In the Summer of 1999, at the height of the internet bubble, I met Len Zacks and his brother Ben. They asked me to come on board to be the Managing Editor of the Zacks Elite newsletter (formerly called Zacks Advisor). They shared with me the power of earnings estimate revisions as harnessed through the Zacks Rank. (I m guessing you ve read a thing or two about the Zacks Rank by now if not, then be sure to visit the Zacks Rank Education Homepage.) I quickly found that I could marry my value investing roots with the timeliness of the Zacks Rank to generate substantial gains. And my timing couldn t be better. The following year the internet bubble burst, yet I made a profit in both my own personal account and for Zacks Elite customers. In fact, since 1999 the Zacks Elite has been recognized as the #1 ranked stock picking newsletter by the independent rating group, the Hulbert Digest. 4

Since then I have grown in my understanding of the Zacks Rank and in my responsibilities at Zacks Investment Research. In 2001 I was promoted to manage their flagship website Zacks. com.

6 Since then I have grown in my understanding of the Zacks Rank and in my responsibilities at Zacks Investment Research. In 2001 I was promoted to manage their flagship website Zacks. com. Since then the group has grown 4 times over as we developed many unique investing services to help investors outpace the market. As my management duties increased it came at the expense of my first love picking stocks and writing commentary. Instead I coached others at the firm to share the power of the Zacks Rank with you. As a New Year s resolution in early 2008 I started doing commentary again. You may have seen me in our weekly Roundtable Review or Investment the Zacks Way videos. That was step 1 to get back to where I belong. And now I am taking the next step which is to start picking stocks again for customers in The Reitmeister Trading Alert. MARKET TIMING Most investment newsletters are only successful in up markets because they only buy stocks. That means that you would have gotten slaughtered following most of these services in 2008 and early Sometimes cash is king. And sometimes shorting the market is the only way to generate positive returns. I know most people don t like to short stocks. And to be honest, I ve never been big on it until recently thanks to the invention of Ultra Short ETF s. For example, when you buy securities like SDS and QID you make money when the market goes down. That is how I profited in late 2008 when the market tumbled. So we will apply a bit of market timing to profit no matter what the market throws our way. I AM WHO I AM Like most people, I am a product of my environment. My dad taught me to be a value investor. Len and Ben Zacks showed me how to be a timely trader by using the Zacks Rank. And 30 years of investing experience has given me the insight to ride out bull and bear markets. I promise to give you my best efforts. In fact, you should expect that I will have my own personal money in virtually every pick I share with you. So we are in this together. I will be wrong plenty. But you will never see me run and hide. Instead, we will learn from every experience and together we will enjoy great success. Sincerely, Steve Reitmeister Editor, Reitmeister Trading Alert EVP, Zacks Investment Research. 5

7 Section 3: Getting the Most Out of the Reitmeister Trading Alert It is our job to provide you with timely and profitable stock picks, but there are steps that you can take to ensure your success with the Reitmeister Trading Alert. Here are a few things you can do to get the most out of the product. 1. Read this guide carefully This guide is your friend. It has valuable information on how to use the product and succeed with the assistance of the Reitmeister Trading Alert. It gives you step-by-step instructions on how to receive alerts and what to do when you receive them. It has important money management tips. 2. Have a working address This is necessary to receive trading alerts. Make sure you can access your in a timely fashion because acting on trades is essential to success. The Daily Summary will be sent at 8:00 p.m. EST, which summarizes the positions as well as what happened on Wall Street during that trading day. Intra-day trading alerts, while rare, will be sent out by 12:00 p.m. EST Unfortunately, many Internet service providers have software programs that filter out s you want to receive, like Zacks Profits from the Pros. To get optimal delivery of our s follow this link for quick and easy instructions. 3. Have an online trading account We are not advocating any particular company for this, but ideally lower commissions will help you achieve a higher overall return. You will make several trades a month, and high commissions can really eat into your profit margin, especially if you have limited capital. 4. Access the site To access the site, go to and enter your username and password. This will take you to the main page where you can view the portfolio, any pending trades, and the commentary. 6

8 Section 4: Follow the Leader The process to receive our trades is very simple, yet we feel it is so important that we are going to spell it out for you. Here are the four steps: Receive the with the daily summary or intra-day buy signal Read the to determine appropriate action Place trades through your broker with the appropriate % allotted Follow the daily summaries to determine when to sell ACT PROMPTLY = MOST SUCCESS And if you don t beat the market, you can take advantage of our 100% Money Back Guarantee. SPEAKING OF THE GUARANTEE. We feel that if we are not able to live up to our word and help you beat the market then we shouldn t be deemed worthy enough to take your money. So in addition to the 90-day, no hassle guarantee, there is a 100% Money Back Performance Guarantee. There are a few conditions that have to be met first, but the bottom line is that we have to perform. Click here for details. 7

9 Section 5: How to Read the Reitmeister Trading Alert Daily Alerts This strategy will often have a trading alert during the trading day. When a Buy Alert or Sell Alert is sent out, you should receive the alert within the first hours of the trading day detailing what ETF is being added or sold and the rationale behind the move. It is important that you act as soon as you can. Here is an example: Signal = The type of alert. It will be a green ball for a buy alert or red for a sell. Company Name = The name of the company that is being added to the Reitmeister Trading Alert portfolio. Symbol = Ticker symbol of stock being added to or deleted from the portfolio. Date = The date on which the stock was added to the portfolio. Reitmeister Trading Alert Portfolio Commentary = As part of the alert, Steve will explain his rationale for the addition or deletion. You will learn his reasoning for adding the stock and the current price at which the stock is trading. 8

Section 6: How to Read the Reitmeister Trading Alert Daily Summary The Daily Summary provides a wide array of details for the Reitmeister Trading Alert every Monday-Friday.

10 Section 6: How to Read the Reitmeister Trading Alert Daily Summary The Daily Summary provides a wide array of details for the Reitmeister Trading Alert every Monday-Friday. This summary has the new signals (if any) as well as the current open portfolio with daily commentary. An account balance and % allocation is also shown. This is valuable information as it conveys what our game plan is, why we are in each stock, when to get out and why, as well as any relevant news. This is ed to you at 8:00 p.m. EST. In regards to the price added for the portfolio, Zacks uses the average of the price at the open and the closing price on the day the stock is added. 9

11 Section 7: Virtues of Money Management Money management can be the difference between realizing large gains and going broke, even if the winning percentage is the same. How can this be? The key point is that winning investors know to ride their winners and cut their losses quickly, and stick with a plan that has proven to work in the past. Here are a few rules that you can follow to further improve your returns: First of all, don t dump your entire portfolio into these Reitmeister Trading Alert picks. Only allocate that portion of your capital that can be comfortably devoted to speculation. While the Reitmeister Trading Alert portfolio is among the least speculative of the trading services, it is still a speculative portfolio. In other words, diversify your portfolio and do not allocate your entire portfolio to the Reitmeister Trading Alert. This portfolio will hold 10 to 15 positions depending on market conditions. You should be able to sleep soundly and act rationally if you are only trading with your speculative money. Keep in mind that reinvesting profits and the power of compounding are your friends in this portfolio. Those frequent singles add up to be a home-run in the end when the phenomenon of compound interest works its magic. EVER-PRESENT CLICHÉ RINGS TRUE While the Reitmeister Trading Alert has a longer holding period relative to our trading services portfolio, it is still a trading service with many ideas coming at you per quarter. It has been said millions of times before, but it is so important it needs to be said again: Don t put all your eggs in one basket. Even if you are the most brilliant investor in the world, there will be losing trades. The key is staying in the game and building your equity over time in a systematic way. This can only be done when diversification is put to use. Not that we have to remind you, but the main point is that your capital was earned through years and years of hard work. Capital conservation sounds boring, but without it, you are fighting a losing battle. We don t want to see the money you have put your blood, sweat, and tears into evaporate due to lack of discipline. 10

12 Section 8: Tying it All Together It is our goal at Zacks to enhance your trading results via the Reitmeister Trading Alert service. This booklet touches upon the details of the service and provides several useful tips to realize the vast potential that the Reitmeister Trading Alert holds. We feel it is our job to let you know that we are here to help you get the most out of the Reitmeister Trading Alert. Again, let s go over some of the important points made in this booklet. Small Gains Add Up To Big Results Not Every Trade Will Be A Winner Timeliness Is Of The Essence Money Management Matters Greatly Have A Working Address We Are Here To Help The last point is important as we have free customer support that should be taken advantage of. Any additional questions that you may have can be answered by just picking up the phone and giving us a call or ing us: (outside the US, ) rta@zacks.com 11

Zacks Investment Research, Inc. 10 S. Riverside Plaza, Suite 1600 Chicago, Illinois 60606

www.zacks.com/counterstrike Zacks Investment Research, Inc. 10 S. Riverside Plaza, Suite 1600 Chicago, Illinois 60606 Contents Introduction 2 Section 1: The Mental Aspect 3 Section 2: Getting the Most