Don Hays

[Scorpion Man]

I am passing along an excerpt from a recent piece by Don Hays, my favorite market strategist. It does not go into his reasoning, which includes lots of charts, but you get the idea. I am forcing myself to maintain my long exposure (as I did during the difficult summer). I have no short term opinion on the market...but over the next 18 months I want to be long.


We now have so many important revelations coming from the only Market Strategist in the world you can trust, if only we and you will listen. I’m pinching myself, trying to stay alert, but it is so difficult to believe these signs as the opposition is trying its best to cloud our vision. Who is this Market Strategist? Am I about to sneak into this self-analysis, telling you of all my good calls, and conveniently forgetting those other “slight” miscues? No, I’m going to spare you this morning. The only Strategist you can really trust is the Stock Market itself. It is the combined wisdom of the smartest and best informed people in the world. WAIT A MINUTE!! Do you trust the Japanese Stock Market in 1990 when it is soaring? Do you trust the NASDAQ 100 when it is screaming upward and the dot-comer of the day is doubling overnight? Of course not. You can only trust the Stock Market when it is being led by the traditional smart money. You can only trust the Stock Market when it is doing something that is opposite what the herd is doing. At tops and bottoms, the “smart” money investors love it when the “dumb” money finally piles on. So how do you tell the difference? Is it smart every time the market is doing what I (or you) think it should do? Again, obviously not. That is exactly why we depend on our time-tested “trust” indicators.
If you are reading this, I am presuming that sometimes we help you in this “trust” director avenue. Every M, W, and F we write these reports, and sometimes we cover the market “wiggles,” sometimes the cyclical market, and sometimes the secular. Our asset allocation is pure and simple a cyclical discipline. It is probably the most important for most investors, since most of us don’t have the discipline to ride out 2-3 year disturbances in the secular trends, ala Warren Buffet or John Templeton. Sometimes those disturbances can last much longer than that.
If I personally would rate the important trend, however, that is really important to your children and grand-children, or to your own retirement, it is the secular trend. It is the one that has sustained my career, even my sanity and most certainly my blood pressure in those temporary detours that attempt to drive us bonkers.
NEVER, NEVER, NEVER in my 37-year career have the secular signs been more exciting than they are today. Let me say that again. This is not a flamboyant statement trying to get your ill-placed attention. This is earth-shattering IF we (you) will listen. I tried to illustrate the many exciting factors the markets are telling us NOW in our Monday’s market comment. I hope you will go to our archives and read it if you haven’t. It is certainly different than what the skeptic’s and herd’s view is seeing now.
From a cyclical sense, there are some signs that despite any of the comments from the Fed, they are opening the monetary spigot for the first time since June 2004. The stock market knows all, and time will probably prove once again that monetary is joining valuation and psychology as a fuel for this rejuvenated secular bull market.