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Investor Psychology

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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  1. Jeff HaysPresidentHays Advisory, LLC Market Valuation Monetary Conditions Investor Psychology Market Trend

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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.

  9. 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.

  10. 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.

  11. 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.

  12. 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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