A Bull Until '99, Analyst Sees Recession by '01

There are a lot of tough jobs out there right now. Raising money for a dot-com, for instance, or running a gas station. But for sheer public humiliation potential, the award has to go to the market strategists who get paid to predict where stocks are headed. I don't follow many pundits, but it's hard to believe that more than a handful of them have made it through the past year's boom-bust-boom-bust without a nasty case of professional whiplash.

But one strategist who's looking pretty smart lately is Don Hays, formerly with regional broker Wheat First and now head of his own forecasting and money management firm. Through an accident of geography, I've been following his work for years, and know that after being bullish for most of the 1990s, he switched gears in 1999 (drawing a mention in my Aug. 27, 1999, column). This put him on the wrong side of the tech-stock boom of late 1999-early 2000. But the call was still arguably correct, since the number of stocks falling in the past year has exceeded the number going up. It's just that the winners have won so big that they've pulled the capitalization-weighted averages to new highs.

Since March, though, Hays has been unambiguously right. With the Nasdaq Composite Index at 4583 on March 29, he wrote to his clients that "the market is about to enter a correction." On May 24, after the Nasdaq had dropped to 3023, he wrote, "The first phase of the bear market is ending. Now it's time for an interlude rally." ...