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Hays Advisory manages portfolios using a "top-down" investment style that incorporates the firm's proprietary tactical asset allocation model. From the asset allocation model (the top), to the sector weighting and stock selection (the bottom), the firm incorporates a definable, quantitative approach. The process begins with deciding how much should be placed in stocks, bonds and cash. Then, the investment committee determines how much to overweight or underweight each major industry sector and picks the stocks within those sectors that pass quantitative screens.

The goal of this disciplined approach is to prevent Hays Advisory from making emotional, irrational decisions that might be contrary to the client's best interests. The discipline guides the investment committee in identifying outstanding stocks in attractive industry sectors during favorable market cycles. During unfavorable market trends, the discipline is designed to find more defensive stocks, while maintaining a higher weighting in bonds and cash.

The model and discipline have been and continue to evolve as a result of historical and continuing studies. Hays Advisory has managed accounts using this discipline since 1998. Prior to this, Don Hays, founder of Hays Advisory, used this process to manage millions in his former position as director of investment strategy for two major brokerage firms.  From asset allocation to stock selection, Hays Advisory is a premier wealth management firm...from the top-down.

Our Top-Down Process

Asset Allocation Model

The asset allocation model is based on a four-pronged approach:

Positive bias of the financial markets

Psychology

Monetary Conditions

Valuation

The allocation model determines the percentage of assets that are appropriate to invest in equities, bonds and cash at any given time for several different types of investors. Hays Advisory's model provides the ability to raise cash when the market is overvalued and vulnerable, and to fully invest when equities are undervalued and conditions are positive. This process sets Hays Advisory apart from other money managers that do not use a tactical approach.

The firm designs portfolios for three different types of strategic investors: long-term growth investors, moderate growth investors and conservative growth investors. These models allow a client to invest to the level of risk that fits their long-term goals an personality. The more conservative a client, the lower the percentage of his/her portfolio will be allocated to the more volatile equity asset class. For instance, a conservative growth investor could have as much as 65% in equities and as little as 20% depending upon the market risk at any given time, while a long-term growth investor can have as much as 100% in equities, with a minimum of 55% when the market risk rises.

By using this four-pronged approach, each account is provided an optimum asset allocation weighting for the three different asset classes: stocks, bonds, and cash. Asset allocation is the first and most important part of Hays Advisory's discipline.

Industry & Sector Studies

After the firm decides how to divide money between the different asset classes, it takes an in-depth look at the 100 individual sectors and industries of the economy to determine those that are positive and improving. The 100 industry groups are divided into ten general market sectors.

Using proprietary methods, the discipline identifies the industry sectors that are showing gradual improvement in both fundamental rankings (earnings momentum and relative valuation) as well as market action (relative price momentum). Once the improving sector moves into the top 50%, it begins to receive a weighting in the portfolio for the first time. The weighting increases as the internal fundamental rankings that the market action of the sector continue to improve. Hays Advisory's sector discipline strives to keep client assets over-weighted in the favorable sectors that are outperforming and under-weighted in the sectors that are underperforming.

At this stage in the process, the first two important steps have been fulfilled: determining the proper percentage of assets to be deployed in stocks, bonds and cash, and selecting the sectors in which to concentrate the stock selection.

Stock Selection

The last stage of the "top-down" discipline involves selecting individual stocks that fit the historical patterns that typically have provided above-average performance.

Utilizing a combination of both fundamental and technical analysis, Hays Advisory selects individual stocks that rank in the top 20% of all stocks based upon the earnings momentum, relative strength and relative valuation. The selected stocks pass through other screens that reveal items such as the historical dependability of earnings expectations. Finally, the investment committee examines the latest research available from fundamental analysts that follow the company.

If you would like more information on how the Hays Advisory can manage money for you, Click here.