This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Guru of the Year (Cont'd)

Guru of the Year: The Runners-Up

The readers chose Don Hays, of Hays Advisory Group in Nashville, Tenn., as GOTY, but he's going to have to settle for the "People's Guru" award.

Hays deserves high praise for recommending investors take a generally defensive posture in 2000 and his persistent warnings until late December that the "bottom" had not yet been felt. Hays' long-term growth accounts gained 17.6% last year and his more defensive accounts were up nearly 23% (both net of fees).

GuruVision has consistently found Hays' work thought-provoking, particularly his comparison of the Nasdaq with Japan's post-bubble Nikkei (an analogy the strategist maintains is working).

On Tuesday, Hays reiterated a view 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, he believes.

Hays was edged out as the "official" GOTY for several reasons:

  • First, his flip-flop in late December. Just two days after saying the Nasdaq would trade as low as 1800, Hays announced a new rally phase was imminent. Although the call and accompanying expectation that the Federal Reserve would ease prior to Jan. 30-31 proved correct, Hays' about-face left some clients feeling frustrated and abandoned (and his critics gleefully snickering).

  • Second, after recommending a "fully invested" posture on Sept. 5, 1998, Hays suggested investors begin scaling back their equity allocation beginning in early 1999. Missing the blowoff at the end of 1999 and early 2000 isn't a crime. But to not count this against Hays at least a little means you can make a strong case that others who recommended a cautious approach in prior years but got it "right" in 2000 should be the GOTY, notably Doug Cliggott of J.P. Morgan, Rich Bernstein at Merrill Lynch and/or Barton Biggs at Morgan Stanley Dean Witter.

  • Third, and finally, Hays has been increasingly bold in critiquing other gurus lately, which is problematic because GuruVision doesn't need the competition. More importantly, hubris is the deadliest sin.

Excessive pride is one reason another reader favorite, Bob Brinker of Marketimer, need not clear shelf space for a GOTY statuette.

In mid-May, Brinker forecast a "bear market rally" and recommended playing it via the Nasdaq 100 Trust (QQQ). The QQQs rallied sharply thereafter, but the call proved controversial . (Brinker later announced he'd no longer make short-term trading recommendations over the radio.)

Brinker's GOTY campaign took a bigger stumble in mid-October, when he (again) forecast a "countertrend rally" and recommended buying the QQQs. That time, the trade itself went awry.

In the Jan. 8 issue, the newsletter writer stuck by the October call, forecasting up to 50% gains by the Nasdaq 100 from its Jan. 2 closing low of 2292. That translates into a target of just over $80 for the QQQs, which closed at $53.44 on Jan. 2, or nearly 30% below the original buy target of $75.13, the Oct. 12 closing low. Additionally, Brinker extended the time frame for the rally to three to six months from Jan. 8 vs. two to four months back in October.

Regarding hubris, Brinker's only mention of anything wrong with the October call was an acknowledgement his new price target is "slightly lower than the original." (Also, several readers have complained Brinker has sought to stifle criticism, or even discussion of his October call on both his Web Site's chat boards and elsewhere.)

None of that changes the fact Brinker deserves kudos for his "macro" call in January 2000, when he revised a 10-year recommendation that investors be 100% in equities, and suggested they raise as much as 60% cash.

Finally, it's noteworthy that Brinker and Hays are both forecasting essentially the same thing: Rally now, but big pain to come beginning in late spring/early fall. The GOTY winner, Tom McManus, sees pain now (or soon) but better times in the second half.

The Fine Print

The selection of the GOTY was subjective, based mainly on the strategists' prognosticating but also their visibility and accessibility to the committee (i.e. Task). An absence of the latter meant many otherwise-qualified nominees were either not considered or didn't make the grade. GuruVision is committed to pursuing its soothsaying prowess in 2001, meaning the competition for GOTY of 2001 is going to be even more intense. (Hopefully, the gurus as a group will do better than they did last year .)

Sector analysts and money managers were not considered because the former have too narrow a focus and the latter should be busy making money and not prognosticating. Finally, RealMoney.com contributors were not considered because it's too incestuous.

To return to the first part of this column, click here.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to Aaron L. Task.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,879.77 +74.97 0.42%
S&P 500 2,070.13 -0.52 -0.03%
NASDAQ 4,763.8540 -1.5260 -0.03%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs