Guru Grades

Don Hays on Long-term Cycles and Shorter-term Trends (Last Updated 8/1/09)

We evaluate here the stock market forecasts of Don Hays since late 2000, shortly after he established his own investment advisory firm. Evaluated predictions/recommendations come indirectly from two sources: (1) first from MarketWatch columns as far back as early 2004; and, as subsequently suggested by reader David Zaitzeff, (2) from TheStreet.com columns covering mostly the period 2001-2004. Don Hays is president of Hays Advisory, LLC, which is "devoted to providing stock market and economic analysis, while giving you sector and stock research to help both the individual and institutional investor make decisions." The table below presents highlights from his commentary and shows the performance of the S&P 500 index over the 21, 63, 126 and 254 trading days after the publication date for each item. Red plus (minus) signs to the right of specific items indicate those that the market has subsequently proven right (wrong). We conclude that:

• Don Hays focuses on the long-term cyclicality of the economy and financial markets, seeking to increase (decrease) exposure to up (down) stock markets. However, he also seeks to identify shorter-term trends that justify asset allocation shifts. He uses a range of fundamental and technical indicators.
• MarketWatch frequently states that Mr. Hays' forecasts have a strong institutional following. TheStreet.com coverage grew negative during late 2001-2002 as Mr. Hays seemed "stuck on bullish" for much of the bear market. His accuracy rate is generally higher in the MarketWatch subsample.
• Mr. Hays tends to issue fairly detailed forecasts, including short-term and long-term commentary, making it difficult to assign binary grades (and easy to find elements that are wrong or right). Much of his earlier commentary involved targets for the NASDAQ, which we interpret as generally applicable to the S&P 500 index as well.
• Based on subsequent stock market performance and our judgments about his forecasts for overall stock market direction, Don Hays' forecast accuracy rate is about 46%, which is slightly below average. His forecast sample size is very small, as is our confidence in this score.
• In the absence of any stock market forecasts cited by the primary source in the past year, we are designating the review of Don Hays as "dormant." We retain this record for historical reference as part of an overall analysis of guru accuracy.

In summary, Don Hays has a slightly below average track record for predicting stock market behavior. Confidence in this conclusion is moderate.

See Guru Grades for a snapshot of the accuracy of various experts in predicting the direction of the U.S. stock market, including links to evaluations of the commentaries of other individual market pundits and gurus.