Compass Investors

Behind the Scenes

Using thousands of mathematical calculations, our
HORIZONTM computer model follows a 5-step analysis
process to identify the best-positioned funds.

HORIZONTM MODEL OVERVIEW

Each Action Report period, the HORIZONTM computer model conducts the following analysis.

  1. The price performance history for each investment choice is divided into multiple time slices*.
  2. The Direction (up or down), Degree (magnitude of movement) and the Duration (elapsed time) of the price performance in each time slice are calculated. Refer to the HORIZONTM "3D" AnalysisTM diagram shown below for one time slice.
  3. A weighting* is applied to each time slice and the weighted time slices for each investment choice are added together.
  4. A Market Bonus is added to any investment choice that is in the currently "favored" asset class. Refer to the section below entitled Market Bonus Calculation for more information about this calculation.
  5. The sum of the above is the HORIZONTM Score for each investment choice.
  6. A HORIZONTM Model Portfolio Allocation percentage* is determined for each choice based on the relative HORIZONTM Scores of the other choices.

*The number and length of time slices, the weighting algorithms and the portfolio allocation percentages are the result of five years of extensive study by the Compass Institute. Over 500,000 possible permutations were tested to develop the correct combination of factors that would provide the optimal result when applied to any well-balanced collection of fund choices.

Adaptive Asset Allocation

Market Bonus Calculation

Every investment choice can be assigned to one of five possible asset classes: Domestic Equities, International Equities, Fixed Income, Commodities or Cash.

At the start of each Action Report period, our affiliated registered investment advisory, Patriot Advisory Group, uses a relative strength computation to rank each asset class from highest to lowest based on the price momentum of the individual investment choices in the asset class.  The asset class with the highest score is considered "favored."  For a detailed discussion of relative strength click here.

Here's how you can think of this process in layman's terms. Consider the Olympics. Teams of athletes compete against each other in events and are awarded points for their team based on their results. The team with the most points wins the gold medal for that event. For our purposes, our "teams" are the six asset classes, our "athletes" are the investment choices and our "event" is price performance. And, the asset class with the most price performance "wins" is awarded the "favored" asset class designation, i.e., the gold medal.

In the example below, on December 31, 2015, the Domestic Equities asset class had the highest number of "wins" (50.7) and therefore was designated the "favored" asset class.

 A sample DALI Report

 
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