There's a flippant retort used in investment circles in which mistaken fund managers proclaim: "I wasn't wrong, I was just early." It's used to vindicate a miscalculation as being the result of bad timing rather than bad judgment. Despite its rather corny and cliched premise, it is used more often than you would think.
In fact, Don Hays, the founder of Hays Advisory Group, points out that the excuse is being widely used right now by red-faced investors who are reacting too early to fears about the Federal Reserve tapering its bond buying program.
"After being in this business 42 years, how many times have I heard that?" Hays asks in the attached video of current concerns about teh Fed unwinding its $85 billion monthly quantitative easing program. "We have a long way to go before you have to worry about that."
In a recent not to client, Hays argues it will take years for the current monetary policy environment to deteriorate from near perfect conditions today to a point where it could threaten the bull market. And even when the Fed inevitably does begin to taper, Hays says it won't be as if the accommodative spigot just gets turned off completely.
In the meantime, Hays urges investors to divide long-term rates by short-term rates and if the resulting figure is greater than 1.4, than he says "there's still huge liquidity."
For the record, the 30-year Treasury yield is currently about 3.2%. If you divide that by the 3-month T-bill yield of 0.04% you get 80. As a result, Hays says "there's a long way to go before raising short-term interest rates creates a problem."
So instead of being worried about the Fed, Hays thinks investors should be embracing the Fed and staying invested in stocks.
"We're not even close to the top of the bull market," he says. In fact, he thinks we've only just begun "to prime the pump."
"A lot of people are starting to jump on the band wagon, which is a good sign. It is the beginning, not the end."