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Jeff Hays President Hays Advisory, LLC. Market Valuation. Monetary Conditions. Investor Psychology. Market Trend. So What Do We Do Now?. Market Valuation. Monetary Conditions. Investor Psychology. Market Trend.

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Investor Psychology

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Investor psychology

Jeff HaysPresidentHays Advisory, LLC

Market Valuation

Monetary

Conditions

Investor

Psychology

Market

Trend


So what do we do now

So What Do We Do Now?

Market Valuation

Monetary

Conditions

Investor

Psychology

Market

Trend

For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.


Investor psychology

Market Trend Analyzer – Investment Phase

Short Term

Medium Term

Long Term

  • When in the Investment Phase:

  • Focus on the long-term moving average

  • Asset allocation decisions are determined by the AAM

For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.


Investor psychology

Market Trend Analyzer – Trading Phase

  • Short-term and Medium-term moving avg. breaks through Long-term moving avg.

  • Raise 30 – 40% Cash

  • Focus shifts to action of the shorter-term moving avgs.

For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.


Investor psychology

Market Trend Analyzer – Trading Phase

  • Short-term moving avg. turns up - purchase 15 – 20% in ETF’s

  • Hold 15 – 20% Cash

  • Short-term moves through medium-term m/a. - purchase add’l 15 – 20% in ETF’s

  • Hold 0% Cash

For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.


Investor psychology

Market Trend Analyzer – Investment Phase

  • Remain in trading mode with up to 40% of the portfolio in ETF’s

  • Short-term and Medium term moving avg. above the Long-term moving avg.

  • Gradually replace ETF’s with individual stocks/0% Cash

For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.


Investor psychology

Market Trend Analyzer – 1929

  • Excessive Margin!

  • Extremely Overvalued - P/E ratio of 32.6

S&P 1929-1933

For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.


Investor psychology

Market Trend Analyzer - 1974

  • DJIA crosses 1,000 – Investors Bullish?

  • Yield Curve inverted

  • Nifty Fifty - Xerox - 49 times earnings, Avon - 65 times earnings, Polaroid - 91 times earnings.

S&P 500 1972-1976

For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.


Investor psychology

2000 Bear Market

  • Greedy investors

  • Tight monetary policy

  • Overvalued

Q1 2000 - Q3 2002

50% Cash

23%

LTG Recommended

Asset Allocation

50% Stocks

25% Bonds

25% Cash

30%- 40%

AAM

Recs.

0% Cash

0%

For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.


Investor psychology

The Anomaly

S&P 500 2007-2009

Asset Allocation

100% Stocks

0% Bonds

0% Cash

For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.


Investor psychology

Back-tested Performance*

Cash Levels Decade Max Drop Annual Return (If Trade <= 1 Year Actual Return)

0 -20.91% 7.8%

0 -20.91% 7.8%

80’s/90’s

30 - 40 -45.26% -12.0%

80’s/90’s

We back-tested the DJIA from 1900- 1929 and the S&P 500 from 1930 – 2009.* For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material. Past performance is no indication of future results.


Investor psychology

Summary

  • We believe the market trend analyzer is a great compliment to our current asset allocation model.

  • We are currently using it as a guide and we will fully implement it once it recommends we go back to a fully invested stance.

  • It is not perfect and will cause some occasional false alarms, but we believe it will add significantly to our results over the long-term.

For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.


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