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Posted: Tuesday 12/13/2011 4:09 PM

Santa or Scrooge?:

I think the sleigh is off course.

Well I am not sure how bright Rudolph's nose is, but it needs to be much brighter. The markets are getting off course here at year-end. This may spell some anguish for the index heading into year-end. The jobs market has shown some hiring, but not nearly enough to offset the European debacle unfolding.

We hit the 1250 mark as I suspected in the last post, but then it could not keep its legs underneath it to rally any further. This latest test is a disappointment. Not only is Europe seeing who can wrestle away the most power, but they are also not really printing any euros like we are printing dollars. I understand printing causes inflation, but they need some to get out of this mess. That is why you are seeing Gold drop just like the markets, if not more.

I suspect the test of the lows may happen in the first quarter of 2012 with the slowing of Europe potentially spreading here to the U.S. It will be a bit muted here as our economy is actually recovering and still ticking up. In fact, the latest quarter, companies are reporting higher earnings and revenues at a ratio of about 1.58 to 1. The average over time is about 1.57. However, this number has decreased from the previous quarter, so if it falls further, we are in for a soft landing due to Europe or another recession. Time will tell and we won't have official figures until early to mid 2012 if this happens.

We are cognizant of these headwinds in the mutual funds and accounts we manage and will keep an eye on any recent developments. Lets hope Santa shows up on time and gets back on track and we keep old Ebeneezer out in the cold.

If you know anyone who wants to be added to receive these posts, please forward this email to them and ask them to sign up to receive them at http://www.thearcherfunds.com/.

Regards,

Troy C. Patton, CPA/ABV

tpatton@thearcherfunds.com

800-800-1776

The opinions contained herein are not intended to be investment advice or a solicitation to buy or sell any securities. Archer Investment Corporation manages The Archer Funds. You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund’s prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund’s prospectus by calling 800-800-1776 or visit www.thearcherfunds.com. Past performance is not a guarantee of future results. The investment return and principle value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Distributed by Rafferty Capital Markets, LLC, 59 Hilton Ave., Garden City, NY 11530 Member FINRA.

Posted: Friday 1/6/2012 11:29 PM

Magic Fairy Dust: We need a little more.

Even the fairy dust of the President giving whispers about a new refi program is unable to keep this market moving higher. Yes, it did cause the banks to sprint higher, but this market is getting bed sores by staying in one place too long.

As we are seeing the unemployment rate drop, this is creating positive undertones in the markets. Yes, I realize that some may be giving up, and some are underemployed. Regardless of the political spectrum you believe in, unemployment is dropping. In fact, by election time, I would not be surprised to see it around 8%, down from the 8.5% we are currently. This is not because of some big jobs program touted by either party in Washington, this is simple math. It take so many people to do a certain job and create more profits. Companies are delaying and stalling until they just can't anymore. Therefore, they are hiring incrementally.

OK, so how did we shape up for 2011 and where is 2012 going?

Well Obama broke the string of up markets we have had in the third year of a Presidential cycle for the last 72 years. I thought with the expansion of profits, we would also see an expansion of multiples taking the market to 1350. So 2011 was basically a flat year. 2012 as we go, should then take some of the strength again. I know a broken watch is correct twice a year, but if we look at normalized growth in the S&P 500 earnings with a normalized multiple, there is no reason barring any major catastrophe the S&P 500 should be at 2000 by the end of the decade. Yes I said the decade. We like to attempt to predict the markets each year, and 2012 is no different, but long-term, profits tend to move higher and coupled with dividends, the market should gain approximately 8% a year through this decade. This is much better than the 2% yield you will get on a 10 year Treasury bond. Ok, back to 2012. By my estimates, 2012 will get the S&P 500 to 1350 where we should have been last year and maybe at some point even brush the 1400 level. However, the "ides of March" are coming. Europe will have to grapple with the debt refi of Italy in March. They need a lot of fairy dust to get them over this hump. The good news is they have to deal with the issue in 2012, not later.

Ok, so how about short-term. Well if the first five trading days of January result in positive results, then it not only will bode well for January, but also the remainder of the year. We generally have about an 80% success rate if January does well and it is 50/50 if January is negative. I think we will continue to see a bit of rally, but the market is losing strength as evidenced by the spread of the market over its 50 day moving average. At the market high in October we were 8.5% over the 50 day, now we are around 3.3%. This means the market is NOT accelerating to the upside. We continue to struggle to get over the October 28th recovery peak of 1285. On that note I am neutral to favoring a downside bias. However, I am not ready to sell into this strength quite yet.

This year will be very interesting to say the least. There are many moving parts with DEBT, ELECTION, EMPLOYMENT, MIDDLE EAST, and many others that may make the markets more volatile than in the past. We will keep you updated to our thoughts and we are looking forward to a successful year in the accounts we manage. Fairy dust only lasts so long and we will need something more concrete.

If you know anyone who wants to be added to receive these posts, please forward this email to them and ask them to sign up to receive them at http://www.thearcherfunds.com/.

Regards,

Troy C. Patton, CPA/ABV

tpatton@thearcherfunds.com

800-800-1776

Posted: Tuesday 1/24/2012 3:34 PM

6th Grade Science: How Far Can It Go?

I keep hearing this commercial, "the End of America as we know it." I have also heard another prophet talk about "American ascendancy." These guys are both right and both wrong, but it is amazing to get two distinct visions out of the same crystal ball with the same data.

Lately, the market has gone up and up like a helium filled balloon. Back in the 6th grade before anyone was worried about the environment, we would attach our name to a balloon filled with helium and let them go asking the people who found them to send them back. Some came down right away and some made it from Indiana to New York. The same balloon, let go at the same time, with the same amount of helium. Two different outcomes. Confusing, right? Well it happens in the market the same way. We can have the same data and the market moves higher or lower.

As I have warned you about in the past, Greece is bankrupt. It is starting to rear its ugly head again and weighing on the markets today after we all knew this was going to happen and the markets have shrugged off the news and headed higher anyways. Following this, Italy will have to finance 90 billion euros between February and April alone to refinance its debt. We will see some impact here in the US. However, to say the End of America is quite over the top. Just because one person shouts louder than the other or puts it in print does not make them right. On the other hand, I have often spoke about corporate balance sheets and the amount of cash on hand. Did you also know that the percentage of debt-service payments (principal and interest) as percentage of take-home income, have fallen to a 17 year low? Once job creation picks up, folks will be in good shape to put money to work and bolster the economy here at home.

Another voice against our economy says we will need to wrestle with the amount of debt we are putting on our books. I do agree with this, but it is not yet come home to roost quite yet. Conversely, one thing to boost our economy greatly is the amount of low-cost energy that has been discovered right here in the old USA. That is right, 2.5 TRILLION cubic feet of gas. This is enough to power the nation for an entire century at current consumption rates. AMAZING!

So both can be right in part and both can be wrong in part, however, what does that mean for the investor. Franky, it means not much will happen in 2012 with the presidential cycle looming and Europe addressing its problems. It does mean this market may be at a near-term top and will sell off a bit over the next week and then further in March. However, if it does sustain itself here, it may just forego some of the problems and run further than I think. My estimate on the S&P low side is 1344 for the year and upper side of 1660. Anywhere in between would be welcomed. We will be watching the data rolling out of Washington, Europe, and Wall Street and be managing the portfolios accordingly.

If you know anyone who wants to be added to receive these posts, please forward this email to them and ask them to sign up to receive them at http://www.thearcherfunds.com/.

Regards,

Troy C. Patton, CPA/ABV

tpatton@thearcherfunds.com

800-800-1776