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Strategy and Research

Strategy and Research. Samuel Kunz, CFA, MFTA. SELECTION PROCESS. Macro Filter Fundamental Quantitative Technical/Timing. APPROACH. Macro  Laffer. Fundamental  Argus. Quantitative  Q Prime. Technical/Timing  DeMark / Oscillators / Paterns / Etc…. APPROACH. Macro  Laffer.

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Strategy and Research

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  1. Strategy and Research Samuel Kunz, CFA, MFTA

  2. SELECTION PROCESS • Macro Filter • Fundamental • Quantitative • Technical/Timing Samuel Kunz, CFA, MFTA - Strategy and Research

  3. APPROACH Macro  Laffer Fundamental  Argus Quantitative  Q Prime Technical/Timing  DeMark / Oscillators / Paterns / Etc… Samuel Kunz, CFA, MFTA - Strategy and Research

  4. APPROACH Macro  Laffer Strategy Don Hahn Fundamental  Argus Quantitative  Q Prime Technical/Timing  DeMark / Oscillators / Paterns / Etc… Samuel Kunz, CFA, MFTA - Strategy and Research

  5. LAFFER/MACRO/WHY? • Father of “Supply Side Economics” • Founding member of Congressional Policy Advisory Board • Member of President Reagan’s Economic Policy Advisory Board (1981-1989) Samuel Kunz, CFA, MFTA - Strategy and Research

  6. Created the Laffer’s Curve LAFFER/MACRO/WHY? - “Memorable event in financial history”Institutional Investor July 1992 - “A few of the advances that powered this extraordinary century”Times March 1999 Samuel Kunz, CFA, MFTA - Strategy and Research

  7. LAFFER/MACRO/WHY? Investment Returns Laffer Macro-100 Large Cap. Composite Vs. S&P 500 Index09/2000 -05/2004* Samuel Kunz, CFA, MFTA - Strategy and Research

  8. LAFFER/MACRO/WHY? Annualized Returns Laffer Macro-100 Large Cap. Composite Vs. S&P 500 Index09/2000 -05/2004* Samuel Kunz, CFA, MFTA - Strategy and Research

  9. Laffer / Methodology / Economic Outlook • 5 Areas of Information Incomes Policy Trade Policy Monetary Policy Fiscal Policy Special Situations RESULT Economic Outlook Samuel Kunz, CFA, MFTA - Strategy and Research

  10. Laffer / Methodology / Economic Outlook • 5 Areas of Information Incomes Policy Trade Policy Monetary Policy Fiscal Policy Special Situations Impact on Private Sector • Regulations • Restrictions • Requirements Samuel Kunz, CFA, MFTA - Strategy and Research

  11. Laffer / Methodology / Economic Outlook • 5 Areas of Information Incomes Policy Trade Policy Monetary Policy Fiscal Policy Special Situations Affects Terms Of Trade • GAAT • NAFTA • Exchange Rates Samuel Kunz, CFA, MFTA - Strategy and Research

  12. Laffer / Methodology / Economic Outlook • 5 Areas of Information Incomes Policy Trade Policy MonetaryPolicy Fiscal Policy Special Situations • Federal Reserve Systems • Monetary Base • Interest Rates Samuel Kunz, CFA, MFTA - Strategy and Research

  13. Laffer / Methodology / Economic Outlook • 5 Areas of Information Incomes Policy Trade Policy Monetary Policy Fiscal Policy Special Situations • Taxing Government • Spending Samuel Kunz, CFA, MFTA - Strategy and Research

  14. Laffer / Methodology / Economic Outlook • 5 Areas of Information Incomes Policy Trade Policy Monetary Policy Fiscal Policy Special Situations • Monopolies / OPEC • Wars • Weather • Etc… Samuel Kunz, CFA, MFTA - Strategy and Research

  15. Laffer / Methodology / Macro Models Company Size Domestic Location Earnings Forecast Fiscal Sensitivity Global Location Interest Rate Sensitivity Trade Sensitivity Laffer Top 100 Samuel Kunz, CFA, MFTA - Strategy and Research

  16. Company Size Domestic Location Earnings Forecast Fiscal Sensitivity Global Location Interest Rate Sensitivity Trade Sensitivity +1 +1 +1 +1 +1 +1 +1 + VALUEADDED LARGE CAPITALISATION + FISCAL CHANGE + EARNINGSCHANGE + FISCAL CHANGE + FISCAL CHANGE RISING RATES 0 0 0 0 0 0 0 - VALUEADDED SMALL CAPITALISATION - FISCAL CHANGE - EARNINGSCHANGE - FISCAL CHANGE - FISCAL CHANGE FALLINGRATES -1 -1 -1 -1 -1 -1 -1 Laffer / Methodology / Macro Models Macro Model Biases Samuel Kunz, CFA, MFTA - Strategy and Research

  17. LAFFER/MACRO/Performance Macro Portfolio Performance By Quintiles vs. The S&P-500 Samuel Kunz, CFA, MFTA - Strategy and Research

  18. Argus Fundamental / Why • Independent Research Firm • In Business for nearly 70 years • 6-point system is a blend of: • Top Down • Bottom Up Samuel Kunz, CFA, MFTA - Strategy and Research

  19. Argus / Methodology / 6-Point System Industryanalysis GrowthAnalysis Financialstrengthanalysis Quality of Management RiskAnalysis ValuationAnalysis Result Buy / Hold / Sell Rating Samuel Kunz, CFA, MFTA - Strategy and Research

  20. Argus / Methodology / 6-Point System Industryanalysis GrowthAnalysis Financialstrengthanalysis Quality of Management RiskAnalysis ValuationAnalysis Outperforming Industries • Forecast Economy • Forecast Interest Rates • Collaborate with Industry Analysts Samuel Kunz, CFA, MFTA - Strategy and Research

  21. Argus / Methodology / 6-Point System Industryanalysis GrowthAnalysis Financialstrengthanalysis Quality of Management RiskAnalysis ValuationAnalysis Peer Market Comparison • Sales • Earnings • Dividends • Cash Flows Samuel Kunz, CFA, MFTA - Strategy and Research

  22. Argus / Methodology / 6 Point System Industryanalysis GrowthAnalysis Financialstrengthanalysis Quality of Management RiskAnalysis ValuationAnalysis Ratio Analysis • Financial Statements • Footnotes Samuel Kunz, CFA, MFTA - Strategy and Research

  23. Argus / Methodology / 6 Point System Industryanalysis GrowthAnalysis Financialstrengthanalysis Quality of Management RiskAnalysis ValuationAnalysis Know Management • Meetings • Road Shows • Conference Calls Samuel Kunz, CFA, MFTA - Strategy and Research

  24. Argus / Methodology / 6 Point System Industryanalysis GrowthAnalysis Financialstrengthanalysis Quality of Management RiskAnalysis ValuationAnalysis Qualitative Quantitative • Institutional Ownership • Insider Ownership • Porter five Forces Samuel Kunz, CFA, MFTA - Strategy and Research

  25. Argus / Methodology / 6 Point System Industryanalysis GrowthAnalysis Financialstrengthanalysis Quality of Management RiskAnalysis ValuationAnalysis Establish Target Price • Forecasts • Adjust for Beta Samuel Kunz, CFA, MFTA - Strategy and Research

  26. Q Prime / Quantitative / Why ? • Flexible  Tailor-made • Relative factors • Historical factors • Proven track record from Morningstar Samuel Kunz, CFA, MFTA - Strategy and Research

  27. 6 Categories 1 2 3 4 5 6 17 Factors 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Q Prime / Quantitative / Methodology Infinite Combinations Samuel Kunz, CFA, MFTA - Strategy and Research

  28. Q Prime / Quantitative / Methodology • 6 Categories Valuations Dividends Momentum Growth Reliability Return A/PE R/PE A/PB R/PB A/PS Samuel Kunz, CFA, MFTA - Strategy and Research

  29. Q Prime / Quantitative / Methodology • 6 Categories Valuations Dividends Momentum Growth Reliability Return Yield Payout Reinv. Rate Samuel Kunz, CFA, MFTA - Strategy and Research

  30. Q Prime / Quantitative / Methodology • 6 Categories Valuations Dividends Momentum Growth Reliability Return Quarterly EPS Quarterly Sales Samuel Kunz, CFA, MFTA - Strategy and Research

  31. Q Prime / Quantitative / Methodology • 6 Categories Valuations Dividends Momentum Growth Reliability Return Estimated Growth Estimated Revisions Time Weighted Revisions Samuel Kunz, CFA, MFTA - Strategy and Research

  32. Q Prime / Quantitative / Methodology • 6 Categories Valuations Dividends Momentum Growth Reliability Return Growth EPS Surprises Vola. Ajd. EPS Surprises Samuel Kunz, CFA, MFTA - Strategy and Research

  33. Q Prime / Quantitative / Methodology • 6 Categories Valuations Dividends Momentum Growth Reliability Return Long Term Price Trend 1-Month Relative Perf. 2- Month Relative Perf. Etc... Samuel Kunz, CFA, MFTA - Strategy and Research

  34. Q Prime / Quantitative / Model 1) Value 2) Growth 3) Rotational (Balanced) 4) Q-Score Samuel Kunz, CFA, MFTA - Strategy and Research

  35. Q Prime / Quantitative / Value Model 1) Deep Value 2) EPS Surprises 3) EPS Revisions 4) 6-month returns Samuel Kunz, CFA, MFTA - Strategy and Research

  36. Q Prime / Quantitative / Value Model Samuel Kunz, CFA, MFTA - Strategy and Research

  37. Technical/Timing • Don Hahn  Long/Intermediate-term • DeMark  Overbought/Oversold • Oscillators  Momentum • Pattern Recognition  Bar charts, candlesticks, P&F Samuel Kunz, CFA, MFTA - Strategy and Research

  38. Recap Macro  Laffer Fundamental  Argus Quantitative  Q Prime Technical/Timing  DeMark / Oscillators / Paterns / Etc… Samuel Kunz, CFA, MFTA - Strategy and Research

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