If you have been waiting for something or someone to get you off the sidelines and back into the stock market, Don Hays just might be your guy. The chief investment strategist at Hays Advisory of Brentwood, TN not only thinks the worst is over and volatility has peaked, but that we're also not in a recession.
While economic data released earlier today on New Home Sales and manufacturing from the Richmond Fed Survey indicate continued weakness, Hays is willing to bet that we are closer to the bottom than the top and "calling the next 3 days or 30 days is a loser's game."
"You can't go by your emotions" he says. According to the indicators Hays follows, "the peak of downward momentum was reached two-weeks ago, much like it was in May of last year." Right now he says the market is in a period of "super undervaluation."
"For baby boomers, this may be the last great time to buy stocks in the next 3 to 4 years...maybe even for the rest of their lives," Hays says.
In the meantime, many investors, including Macke, simply want out ahead of the Bernanke speech this Friday from Jackson Hole, WY on concerns that it holds too many variables. Hays believes Bernanke is still important and will continue to support the market. "But the real key in my opinion is not Bernanke, it's what's going to happen in this Super Committee," he says, referring to the Deficit Reduction Committee tasked with a Thanksgiving deadline to reach a bipartisan budget cutting deal.
If you still need more impetus to buy in, Hays is also drawing confidence from this factoid that has a 95% success rate: Any time the Philly Fed Index has posted a reading at or below -30, (as it did last week) the S&P 500 has risen an average of 23% over the next 12 months, and has produced positive results in 19 of 20 occurrences dating back to 1974, e.g. 95% success rate. Hays credits his friend Jason Goepfert of SentimenTrader for the stat.
With this in mind, and a market that has been battered by economic worries, Hays thinks Industrials and Technology would be smart bets for the coming bounce he is expecting.
"Things are happening right now that are very appropriate for long-term investors to be moving in to stocks, not out of stocks."
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