The central idea behind Stockbee lemonade strategy is buy extreme weakness and sell extreme strength.

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1 Lemonade Strategy for 401k Update:Oct 24, % allocated to IARAX (number 1 rank by TI42) 25% allocated to FBTTX (number 2 rank by TI42) 50% allocated to FLSTX (last ranked by TI42) (10/03/2014) must hold for at least 31 days. The objective of Stockbee Lemonade Strategy is to not lose money and grow the 401k account within the constraints of limited fund choice and minimum hold period rules. In real life situation the strategy has had no negative years in last 14 years and returns ranging from triple digit to single digit in last 14 years. The central idea behind Stockbee lemonade strategy is buy extreme weakness and sell extreme strength. Market breadth is used to decide these extremes. Extremely bearish breadth is used to time bullish entries and extremely bullish breadth is used to target exit. Mutual funds are bought when market turns from extreme weakness in breadth. At that stage mutual fund with highest relative strength based on TI 42 is bought or mutual fund with highest beta is bought. Or if beta value is not available the fund that has done the best in last 3 bull bear cycle is selected. In addition to breadth based timing the fund to invest in is selected based on momentum ranking. On an ongoing basis momentum rank using TI 42 is used to ensure the fund selected remains ranked in top 3. 90% of the time I hold only one mutual fund as my experience of 14 years shows holding one fund is best approach. Funds are sold when breadth reaches extreme and money moved to money market. Strategy has worked for last 14 years and avoided all bear markets. The strategy aims to be invested only during certain periods in one or three funds. It avoids negative returns period in the market by selling on extreme bullishness. In last 14 years I have avoided all bear markets and participated in bulk of bull moves.

2 Compounding works best when you do not have negative periods that is the rationale behind the strategy. The strategy is aimed at avoiding negative compounding periods. The 401k account has very few choices of funds and there are trading restrictions in terms of minimum hold periods and number of round turns. That is why it is called Lemonade strategy. Current Allocations: IARAX 25% (10/24/14) FBTTX 25% (10/24/14) 50% FLSTX (which is the best performing fund in most Bull periods in my choice but is ranked last currently indicating different nature of bounce or fund is not positioned for rebound) 2014 returns 6.5% 2013 Returns 8.4% 2012 Lemonade Strategy returns 17.6 (S&P returns for 2012) No negative year in last decade. Top 3 funds by Beta nmsax flstx fbttx Beta is found on sites like Morningstar or Zacks These are the fund with highest probability of making big move in any rally based on past behavior and returns. Beta can change. During 2003 to 2007 rally ODMAX had highest beta. During 2009 also it had highest beta but it went no where for next 2 years. So Beta along with TI42 rank is useful.

3 Fund Universe in Lemonade 401K Strategy Can only invest in these finds and must hold for at least 1 month and can not do more than 3 round turns in funds in a year. Symbols from TC2000 IARAX FBTTX HIPSX FSIAX FSRTX CSIEX NMSAX FSCTX OGEAX FNITX FDXAX FEYTX FEIRX FATEX MIDHX ACSTX OPPAX IVIAX MDIIX ODMAX FITIX FLSTX

4 Restrictions Minimum hold period for funds is 1 month Not more than 3 round turns in a year in any fund allowed Cash= Money Market fund Software Used for Tracking TC2000 TI 42 PCF for ranking avgc4/avgc42 Free Mutual Funds Data Sources Google Finance Yahoo Finance Zacks Morningstar

5 Best Time to get fully invested 5% correction: start becoming bullish 10% correction: bullish 20% plus correction: sell husband/wife, boyfriend/girlfriend, kids and buy stocks Exits in Lemonade Strategy Fund ranking drops below 3 one month post entry Market Monitor reaches extremely bullish phase indicated by number of stocks down 25% in quarter below 200 Market Monitor Primary Breadth indicator turning bearish. This will be in case of MM signal being false and after entry quickly goes negative again. Contributions The account is fully funded every year as per IRS limits. The company matches 6% of contributions. You need to customize the strategy for your set of funds and restrictions. That requires a thorough understanding of rules governing your account.