Tyler Vernon is a Principal and Portfolio Manager at Princeton, NJ based Biltmore Capital Advisors.

We had the opportunity to ask Tyler how he's allocating among different asset classes in this environment, and what his overall strategy is for outperformance in 2010.

We’ve been fans of using leveraged and unleveraged issues since they first became available. The introduction of these issues made it possible for retail investors and financial advisors to construct hedge-fund like investment strategies.

There has been controversy regarding these issues coming out of the recent bear market that perhaps ended in the spring of 2009. It’s natural to look for scapegoats even beyond the obvious toxic derivative mess. One area singled-out was the low hanging fruit of leveraged short ETF issues being offered. The media and regulators pounced on a few issues many felt didn’t achieve results investors expected. This was primarily due to a lack of understanding as to how these issues functioned given market volatility, daily resets and compounding effects.

Every time a major stock index approaches a new high, invariably we can find calls that "a major top has already been made". We have seen several such articles in recent weeks. While these incessant calls for a major top may be 100% accurate at the present time, a review of historical major tops gives little support for such a claim. A short-term top within a major bull market can occur at any time, but major tops do not occur very often.

Fundamentals Are Improving: We also have to consider improving fundamentals when constructing a case for a major top in stocks or the lack thereof. Thursday’s unemployment report came in better than expected, but more importantly the four-week moving average of jobless claims dropped to its lowest level in almost a year. Third quarter earnings that came in above expectations, beat those below expectations by a ratio of 6-to-1. Admittedly, earnings estimates in Q3 were conservative, and employment will remain weak for a time, but recent data does suggest some economic improvement.