This is What We Believe!

Is there anything in your life that you believe, but you can't prove it when the herd is running in the other direction?  There is in mine - several things.  I can give anecdotal evidence that seems to prove it, but if you really wanted to debate these beliefs, the judge would probably say that there is insignificant evidence, because this time there are other good-sounding opinions.

I am bullishly biased.  If you are not, I believe you are fighting an amazing piece of historical evidence.  How could anyone be neutral on the US stock market with a history like this?

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But the key word is "biased."  Very obviously, there are times when that bias has to be put on hold, and certainly, the year 2000 was one of those times.  We were so bearish in that 1999-2000 period that our readers kept telling us we were perpetual bears.  Back then, we told those readers that the top made in the NASDAQ Composite shown below would not be seen again for at least 10 years.

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Then today, we are hearing the exact opposite refrain...that we are perpetual bulls.  But as the Hays Asset Allocation Matrix remains in it's most bullish position, we believe:
  • that the distortion of the stock market in 2007-2008 was a very important message sent to the American people (and to the world) to get the massive leverage, derivatives and spending under control.
  • the price-to-earnings ratio of the S&P 500 (based on the 12-month forward earnings) will gradually increase over the next four years from today's level of 12.5 to 16.
  • the next few years will produce a very substantial bull market.

Investing is not trading, and nobody can predict what the next few weeks will bring, but the odds, according to the Hays Asset Allocation Model, are tremendously on the side of very strong gains in stocks over the next 6-30 months.

To view today's full commentary, click here.

Don Hays

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