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Don Hays on Long-term Cycles and Shorter-term Trends

| Last Updated: July 24, 2008 | Posted in: Individual Gurus

Guru Accuracy Rating
This is about average. Current guru average is 47%

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 quotes forecast highlights from the cited source and shows the performance of the S&P 500 Index over various numbers of trading days after the publication date for each item. Grading takes into account more detailed market behavior when appropriate. Red plus (minus) signs to the right of specific forecasts indicate those graded right (wrong) based on subsequent market behavior, while red zeros denote any complex forecasts graded both right and 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.
  • Don Hays’ forecast sample size is moderate, as is confidence in the measurement of his accuracy.

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.

    S&P 500 Index  
Date Comments re: Don Hays at MarketWatch and TheStreet.com 21-Day Return 63-Day Return 126-Day Return 254-Day Return  
7/24/08 “…the evolution is coming to an end. …the big rally in financials, airlines, the rise in the t-bill rate, the decline in commodities, and the rally in the dollar are cheering for a major bottom. I did (and do expect) that this third panic will be the final one…” His recommended asset allocation for all risk categories includes no cash at all… 3.2% -28.4% -33.9% -21.8%
2/27/08 “…we remain very bullish, and do not believe the recent panic…is a new bear market… Is there any safe investment today? Hell, Yes! The U.S. stock market.” -4.7% 0.4% -8.2% -49.2%
2/4/08 “We are battered but bullish, because we are confident that we know how this story ends.” -3.4% 1.9% -8.7% -38.7%
1/21/08 “We’ve been here before — not a lot of times, but occasionally the holes in the road do incur more volatility and temporary pain than we would have expected. But so far at least, during my 40-year experience, the “rubber-band” sometimes stretches pretty far, but has never broken, and we do not expect it to this time either.” 2.4% 5.9% -3.9% -36.5% +
11/7/07 “Our asset allocation model continues to recommend being fully invested in equities, and we are currently putting that 8% of cash we pruned a few weeks ago back into some new stock positions.” 2.0% -9.4% -5.9% -37.7%
9/20/07 “…the massive new bull market…is still ticking.” -1.2% -4.2% -12.5% -21.8%
8/30/07 “…this bull market is very healthy, and poised to present huge gains in the next 6-30 months.” 6.1% 0.8% -8.7% -12.5%
7/26/07 “Welcome to the Last Half of this Bull Market…that will produce accelerating gains in these next 18-20 months. …Nobody today is looking at March or April 2009, when our guesstimate is that this bullish stock market might be ready for a meaningful correction (i.e. cyclical bear market.)” -0.2% 2.5% -8.8% -14.8%
6/18/07 “…every time it gets even close to saying “raise a smidgeon of cash,” the market has refreshed itself as it did last week, when the Psychology Composite moved back to the green zone. And Monetary is getting stronger and stronger and stronger.” 1.0% -3.1% -2.8% -12.3%
6/7/07 “…with the yield of the 10-year T-Note at 4.98%, you see that is not even comparable yet with an earnings yield of the S&P 500 offering 6.49%. So this big huge draw for stocks is still telling us that stocks are 23% undervalued.” 2.8% -1.2% -1.9% -8.9%
5/24/07 “…the stock market in the next 6-30 months is going to be extremely good…. It is very unusual for this model to give this kind of bullishness.” -0.6% -2.9% -4.5% -7.7%
1/4/07 “…a very stable year that will finally convince Chicken Little that the sky is not falling.” 2.0% 1.5% 7.5% -2.0%
11/9/06 “We still have a super bullish relative valuation of the stock market… At the same time, monetary conditions are…EXTREME bearish to only VERY bearish. …We are continuing to keep our 10% cash, erring on the side of still expecting “one more correction.” 2.5% 4.0% 9.1% 6.7%
10/26/06 “NEVER, NEVER, NEVER in my 37-year career have the secular signs been more exciting than they are today…” Hays even interprets that fact that the stock market is overbought according to some indicators as bullish. -0.5% 2.3% 6.7% 11.5% +
9/28/06 “…big and broad lift-off that we expect in the months ahead.” 2.9% 6.6% 6.1% 15.0% +
9/11/06 “It is very hard for any of us in the Strategy Business to say the word recession, but the yield curve has now been saying that was in the cards for the last few weeks. The Dow Transportation Index is certainly confirming economic weakness.” 4.1% 8.3% 6.0% 14.2%
9/6/06 …raise cash positions to as much as 10%. 4.1% 8.4% 7.8% 13.2%
8/21/06 “…start paring back on those disappointing stocks that have not used the recent up-move in the market to heal themselves. Don’t overdo it. The tug-of-war… is still on the side of the bulls.” 2.1% 7.9% 12.3% 14.0%
7/6/06 “…The recent great stock market buy signal is being confirmed.” 0.4% 4.7% 11.3% 19.2% +
6/14/06 Hays is in the embarrassing situation of having given an all-out buy signal on June 2. “…in only a few months we almost could not even remember those tough days.” 0.5% 6.8% 14.9% 24.7% +
5/18/06 Very short term optimism. Medium-term pessimism. Long-term optimism. -1.7% 2.7% 10.4% 20.6%
4/17/06 “Stay patient and positive. Short Term is neutral.” 0.5% -3.8% 6.0% 15.5%
1/2/06 We are expecting one more squall, [a short-term 5-10% decline] and then clear skies…We are projecting the S&P 500 to move over 30% in these next 12 months. We are projecting that the price of oil will fall to $42 a barrel, and that the yield on the 10-year bond will continue to remain close to current levels … or lower as the Fed funds rate is actually cut.” 0.2% 2.3% 0.9% 11.4%
12/5/05 “We’re doubtful that this rally is the BIG liftoff that we expect, and we are guessing that before the bulls start stampeding up the wall of worry, it needs to be refortified to stand the load….We’re guessing the Fed will not stop raising rates until they’ve gone too far, as they did in 1994-5… It’ll be OK, you won’t even remember this irritation later on in 2006 when this baby really starts to rock.” 0.9% 1.1% 0.1% 11.5% +
10/12/05 “This is almost always necessary to get the healthy and necessary fear started. …this will not come all of a sudden, and we probably have a few more weeks before it occurs in full.” 4.5% 9.9% 9.4% 16.3% +
10/6/05 Hays sees the market approaching a major buying opportunity. 2.4% 6.9% 9.9% 13.6% +
9/26/05 “…we have not seen the necessary increase in the wall of worry to convince us this market is ready for liftoff.” That said, he’s still expecting “a major rally in 2006.” -1.6% 4.3% 7.1% 10.1% +
8/16/05 “…we’re still banking on a correction here before the stock market is ready to break out of this 20-month digestion period.” 0.7% 1.3% 4.6% 6.8% +
8/11/05 “…we’re still holding out for a better time to buy in the next 2-3 months.” 0.2% -1.6% 2.1% 3.9% +
7/25/05 …right now Hays anticipates a stock-market correction. -0.9% -4.2% 2.8% 2.8% +
6/10/05 …stocks will head south sometime in the first half of July. “It is too late to buy, even though a little too early to prune, but pruning time is not far away.” 2.0% 2.8% 4.9% 2.7% +
5/23/05 …the market’s headed higher, but with some rough water ahead. 1.7% 2.2% 4.1% 6.6%
4/21/05 “…the year will have to experience some more ‘sweating’ before the bull market is ready to roar again.” 2.5% 6.5% 1.6% 12.2%
4/18/05 …there’s a strong chance that this year’s lows on the S&P 500 are just three days away. “I wouldn’t say there are 100% odds, but a bad CPI might produce the one last good decline…” 2.4% 7.2% 2.7% 14.4% +
4/4/05 Don Hays…put his cash back in the market at the beginning of last week…he expects a rally to take place over the next two weeks, taking the S&P 500 back to this year’s high of 1229. -1.3% 1.3% 4.4% 11.5% +
3/31/05 “…get ready of the BIG PARTY that will arrive either late this year or early next year.” -2.0% 1.8% 3.0% 9.9%
3/24/05 “…a short-term bottom is at hand. But it doesn’t necessarily mean…that this will be the last bottom, but is a time to replant any excess cash — especially on any additional weakness.” -0.8% 3.6% 3.3% 10.4% +
3/10/05 “My Projected Early Year Correction Should Start NOW.” -2.3% -1.2% 2.2% 7.3% +
9/13/04 …bonds are sending a fantastic message. Not too hot, not too cold, but ‘just right.’ -0.4% 5.6% 6.6% 9.0% +
8/23/04 …the stock market has its own reasons to move — up, very dramatically. 1.6% 8.0% 9.7% 10.4% +
8/10/04 “Does that change my opinion that the rest of this year will produce a strong recovery? No, but there is no doubt that we will have to bob and weave until the panic…and the downward momentum is reversed.” 3.6% 8.1% 11.4% 14.7% +
7/16/04 “…the big rally is within just a couple of weeks of blasting off.” -2.0% 1.1% 7.8% 11.6% +
7/15/04 Ultimately, Hayes expects “a super strong new cyclical bull market to emerge that will last until 2008, and excite investors as much as they became in 1999-2000.” -3.8% 1.4% 6.9% 10.3% +
5/20/04 “We’re buying TODAY.” 4.2% 0.2% 8.5% 9.6% +
3/16/04 …the Dow and S&P 500 could see a slightly lower low. But the risk from here is low …” 1.6% 1.9% 1.6% 7.1% +
2/24/04 “…this is nothing more than a short pause, and a prelude to what we suspect will be the last nice rally into Election Day.” -4.2% -4.0% -3.8% 6.3%
2/5/04 Don Hays…has just, very unusually, turned bearish (short-term). 1.6% -0.6% -4.2% 6.5% +
1/8/04 …there is at least a 50% chance that the S&P 500 will climb 31% over the next 12 months. 0.7% 0.8% -1.7% 4.5%
11/3/03 …the bull market is still alive and well… 0.5% 7.3% 5.7% 10.1% +
7/21/03 Don Hays…has remained quite bullish and grown emboldened in recent months. 2.4% 7.3% 16.5% 11.0% +
5/3/03 “The market [has] reached [an] extreme overbought condition.” This typically presages “a temporary pause-to-refresh to allow the overbought condition to abate.” 6.4% 5.8% 13.0% 20.2%
10/14/02 …the S&P 500 was 50% undervalued on Wednesday relative to the 10-year Treasury note, suggesting that at least some snapback was in order. 4.9% 10.1% 5.2% 24.8% +
7/25/02 “…super-strong evidence that a major bottom will be made in the next few days.” 12.2% 6.1% 5.8% 18.0% +
7/19/02 …signs of a bottom are in place. 12.1% 1.4% 7.9% 16.6% +
7/5/02 Hays continues to recommended 100% stocks for aggressive investors (intact since Sept. 26). -15.6% -16.3% -8.1% 1.3%
6/21/02 …Hays is still bullish. -19.4% -14.7% -9.9% -1.4%
5/31/02 …Hays wrote he’d be “very surprised” if the lows of last Friday didn’t turn out to be the worst for major indices “for a few weeks at least and maybe for a long time.” -9.2% -14.0% -14.4% -7.6%
4/29/02 “The upside potential both on the short- and long-term appears to be intact.” 0.2% -20.0% -17.2% -14.0%
3/25/02 “One more spirited celebration rally.” -3.4% -12.6% -25.3% -23.3%
3/18/02 …Hays expects the peak in this phase of the “baby bull market” and for the year to occur sometime between now and the beginning of May. -3.4% -13.6% -23.7% -24.9%
3/6/02 “This baby bull market is very much alive and well…we’re delighted that we are already fully invested.” -3.4% -10.5% -24.5% -30.6%
1/28/02 …major averages will rally sharply in the weeks ahead, offering upside “guesstimates” of 11,200 for the Dow Jones Industrial Average, 1290 for the S&P 500 and 2250 for the Nasdaq Composite. -2.0% -5.0% -24.7% -25.5%
1/14/02 …Don Hays…remains stubbornly bullish. -1.7% -3.2% -19.4% -19.7%
11/30/01 “…the easy money on the rebound effect has been made.” Midweek, Hays sold the Nasdaq stake he bought…when trading resumed following the Sept. 11 terrorist attacks. “I am not a short-term trader, but these type of conditions are just too easy to pass up [and] the ‘bounce back,’ especially for Nasdaq stocks has pretty much neutralized the oversold condition. Even though a correction is certainly not a sure thing, it is a distinct [and] growing possibility.” 1.3% 1.3% -8.7% -19.5% +
11/14/01 …a “baby bull market” was born on Sept. 21. “It is still a healthy baby.” -1.6% -2.2% -3.8% -21.1%
9/26/01 “At this point it’s hard to find something from my point of view that is not telling you this is one of those classic buying opportunities…there’s almost no resistance for a long way up.” 9.2% 13.7% 13.7% -19.0% +
9/10/01 “I’m nervous — but not even close to being ready to throw in the bullish towel. My nervousness is only for the short term and, in fact, my bullish intermediate- and long-term excitement continues to build.” -0.2% 4.1% 6.7% -20.4% +
8/22/01 …more bullish than at any time since mid-1996. “As of right now, I feel better about the long-term nature of the market than I’ve felt in long time.” -12.6% -0.7% -4.8% -21.4%
7/31/01 “…the Dow industrials making a record high in the weeks ahead.” -5.2% -10.5% -9.6% -25.2%
7/20/01 “…the ‘bounce’ patterns are very much intact. That bounce has only begun.” -3.3% -10.4% -6.5% -25.4%
7/2/01 “…the market is now poised for a three-month move on the upside that will push the Dow Industrials to a new all-time record high.” -1.7% -13.5% -5.2% -25.0%
6/4/01 …the economy cannot avoid recession despite the aggressive rate cuts. But the rapid growth of money supply, plus the psychological impact of rate cuts will sustain the market through the summer. -2.6% -10.9% -7.6% -19.5%
5/22/01 The new bull market is “not over yet,” he declared. “We still have plenty to go.” -5.5% -10.5% -12.1% -18.5%
4/20/01 …an “important low” was established in mid-March and that stocks are likely to continue rallying going forward. 5.6% -2.2% -12.7% -13.4% +
3/20/01 “…a major bottom is within the next two weeks.” 9.7% 5.8% -15.5% 0.4% +
3/2/01 Hays is sticking to his recent call for an interlude rally that precedes the third stage of the bear market, which he maintains will begin some time in the second quarter. -7.2% 1.8% -6.9% -5.6% +
2/7/01 “…tread water for a couple of more days, and then start a more serious decline…in the next four to five weeks.” -8.0% -5.9% -10.2% -17.7% +
1/29/01 Hays recommended traders “nail down your profits and try to pinpoint the next bottom,” which he predicts will occur in the next four to five weeks. For investors, he suggested “riding out the first couple of waves, with the intent of taking profits at the last peak of this interlude rally.” -9.1% -8.1% -11.6% -20.6%
1/18/01 …the markets are currently enjoying an “interlude rally” between the second and third phases of the bear market. The third, or “capitulation phase” of the bear market will begin between April and June and will prove to be the most painful yet for most investors… -3.4% -8.1% -10.4% -15.9% +
1/4/01 …the near-term advance…an upside of 15% to 25% — “will be the last interlude rally before the ‘new era’ and ‘old era’ join hands and jump off the cliff together in their unilateral third bear-market phase.” 1.6% -17.3% -8.6% -14.6%
12/24/00 “…a few more weeks of scares, fits and starts,” but ultimately a “trading rally with good upside potential.” …”I still expect the third phase of the bear market, this time including all stocks — new and old era — to begin” as early as April 2001. 3.0% -10.1% -7.5% -10.8%
12/4/00 …he is “aching to be bullish”…but laments it is “still too soon.” 0.6% -5.4% -3.1% -14.2% +
11/28/00 Don Hays…forecast…a “major bottom” within the next three to six weeks. …the bottom will come only after a huge decline by the index that “can be unbelievable in its damage as the lemmings [including some of the Street’s favorite gurus] take the last plunge.” -0.1% -7.2% -6.6% -12.6%
11/21/00 “…we are within 6-8 weeks of a significant buy signal that could produce 20% gains in the following six months.” -5.4% -7.0% -4.3% -15.4%
11/17/00 …the index will continue to decline for the next six to 10 weeks before it reaches the ultimate bottom of this “second phase” of the bear market…the end of phase two will come after a “climactic four-five days that will really knock the stuffing out of the market…” Hays’ draconian market view is accompanied by an expectation the U.S. economy will soon enter a recession -4.5% -6.5% -4.0% -17.5% +
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