Investors & Friends:

Here's a summary of our investment actions from the past week.

Option Strategies - Naked Puts

1) Nucor Corp (NYSE: NUE) - We sold July $25.00 puts.

The Investrio Stock Selector Fund Bull and Bear Market Indicators Report for the week ending January 1, 2010, is attached.

Our 2010 Outlook (the concise version)
In 2010, we'll continue targeting companies with "wide moats" or durable competitive advantages, either going long or selling put options at attractive strikes and premiums. If the puts are assigned to us, these will be companies we'd be happy to own otherwise. We'll also continue targeting high yielders with safe dividends. We'll continue to be on the lookout for short/hedge opportunities to protect the portfolio in the event of a sustained market correction or worse case scenario where we dip back into recession. As far as industries, we'll be watching drug companies (Obama healthcare shouldn't be too much of a drag on profits, and 30 million uninsured will start buying drugs), clean energy (the trend continues gaining momentum in 2010), technology (leaning towards wireless and software plays), and commodities (they continue rising as dollar continues orderly decline.)

We at Investrio wish you all the best and a Happy New Year.

Lead Fund Manager
Investrio

Etcetera

1) A quote for the new year, worth repeating, from George Soros: “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”

2) A very smart investor recently described money management as being a form of applied experimentation in the social sciences. You get to think about how the world works, and then you get to make bets based on your hypotheses. These bets are untimed, and they are uncontrolled. Sometimes a good decision can generate a bad outcome, and other times a dumb idea can pay off big. Investing is not a math problem. It's a bet on future events. Take Alessandro Barnini's comment. He is a senior executive at one of the smartest, most sophisticated players in an industry that isn't particularly nimble (Eni, an integrated energy company), yet he still is reduced to hoping for a certain outcome, the impact of which would be huge for his company and its competitors. Think about what no one in Barnini's industry knows that would really help them: the future prices of oil and natural gas. Remember in the summer of 2008, when oil surged above $140 per barrel? Much of the data pointed to still higher prices. The experts had no idea that we were on the precipice of an 80% price decline. Similarly, in 1990 few could imagine that Japan's economic power was higher than it would be at any other point for the next generation. Every signpost pointed to greater Japanese domination of the global economy, yet the country was about to enter into a downturn from which it has yet to recover nearly 20 years later.

3) 2010 marks the point when the U.S. economy will be about halfway through its latest commodity cycle. Another piece of evidence that inflation could be the future financial driver is a study by Barry Bannister of Legg Mason Wood Walker, Inc. who
has found that since 1871, stock and commodities tend to trade places for economic leadership. These cycles tend to last an average of 18 years. The study shows that during such cycles, stocks will outperform commodities on a relative strength measure for about 18 years and then handover the reins to commodities for the next 18 years or so. The 1970s oscillated up and down, with the Dow Jones Industrial Average struggling to maintain a break above the 1,000 level because commodities, like oil, were rising to new heights. Oil moved to $11 per barrel by 1974 and $42 per barrel by 1982. But 1982 seemed to mark the end of a commodity cycle because oil topped out and one of the largest stock market bull moves emerged and lasted until the year 2000. The market rallied for 18 years from 1982 to 2000 and has since oscillated sideways in large swings. Meanwhile, commodity prices have risen significantly during this time period. It's no secret that the 2009 stock rally has been tied to the performance of commodities, particularly gold and oil. The year 2010 marks the point when the U.S. economy will be about halfway through its latest commodity cycle as described by Bannister's study. This could spell another nine years of higher commodity prices and volatile, but generally stagnant, stock prices. For 2010, investors may find it worth their while to consider focusing on commodity-related exchange-traded funds (ETFs) or companies. During times of commodity-leading cycles, growth stocks become harder to recognize and identify, so it seems like common sense to focus your research where, according to Mr. Bannister's report, returns are more likely to occur. However, investors need not limit themselves to the futures and forex markets. There are a number of available ETFs that attempt to invest directly in commodities, such as the Spyders Gold Trust (GLD), iShares Silver Trust (SLV) and United States Oil fund (USO). Additionally, various foreign currencies can also be traded through ETFs. For example, investors may invest directly in the Australian Dollar (FXA), which commonly benefits from Australia's massive ore mines or the Canadian Dollar (FXC), which tends to benefit from rising oil prices on its vast oil reserves.