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<p align="left">Hatton Consulting, Inc. provides impartial asset management
services to individual, institutional, and corporate clients. We are not affiliated
with any company that creates or sells investment products, allowing us to be
completely objective in finding, suggesting and selecting the appropriate solutions
to meet the unique needs of every client. We work for you, acting as your personal
Chief Financial Officer and advising you on the most effective ways to meet
your financial goals. Our professionals are skilled at integrating investment
planning with estate and tax planning for optimum results. For us, there is
no greater goal than gaining your trust and confidence as we work toward your
financial success and security.
<p align="center"><b>PHILOSOPHY</b></p>
<p>Our philosophy is rooted deeply in the tenets of Modern Portfolio Theory and
the foundation of MPT, The Efficient Market Theory. Harry Markowitz originated
this body of academic work in the 1950's, who in 1990 won a Nobel Prize for
his contribution. In addition, many great financial economists have devoted
their lives to substantiating and adding to this prominent theory.</p>
<p>The basic tenets of this theory follow.</p>
<ul>
<li>First, the financial markets are "efficient". This is the belief
that all current information is currently reflected in the stock price of
a particular company. The implication is that active or fundamental analysis
does not lead to returns that exceed a particular benchmark in the long run.
An important assumption, for this theory to hold true, is that all new information
must be disseminated to all investors quickly and completely. In today's world
of lightening fast information technology, this is certainly true. If this
is true, investors could then only beat the market because of luck or insider
information; the empirical data overwhelmingly supports this theory. Further,
the efficient market theory clearly states that market timing and individual
stock picking do not lead to market beating returns in the long run, therefore,
"active" management does not work. We support the Efficient Market
Theory.<br>
<br>
</li>
<li>Second, different asset classes (i.e. large-cap stocks, international stocks,
small-cap stocks etc.) have different risk levels. Therefore, investing in
asset classes with higher risks, in the long-term will result in higher returns.<br>
<br>
</li>
<li>Third, proper diversification among the different asset classes may lead
to less risk with more return.<br>
<br>
</li>
<li>Fourth, any anomalies in the market that are exploited to achieve above
market returns will attract competition and eliminate the anomaly quickly.
The grandest example of this is the debacle of Long Term Capital Management
in the late 1990's.</li>
</ul>
<p>Therefore, we build portfolio's using structured index funds that precisely
match the risk level in the portfolio with the risk tolerance of the investor.
These portfolios have low turnover, low costs and for taxable accounts are extremely
tax efficient. It is our belief, supported by tremendous evidence, that disciplined
adherence to MPT will allow investors to attain the greatest return for any
given level of risk taken.</p>
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