Skip to comments.Bull Market Five Years On: Still Celebrating
Posted on 03/09/2014 8:14:23 AM PDT by shove_it
To Continue Gains, Stocks Are Liable to Rely More on the Economy Than Fed Support and Need Higher Corporate Profits
As the bull market turns five years old, stock investors have a lot to celebrate.
The Dow Jones Industrial Average has soared 151% since stocks bottomed March 9, 2009, following the financial crisis. That ranks it fifth in gains among the 32 bull markets since 1900.
It also is tied for fifth-longest-running, in trading days, with the one that ended in 2007, according to Ned Davis Research.
If the current stock advance lasts another 16 trading days, it will be the fourth-longest, surpassing the one that ended in 1987...
(Excerpt) Read more at online.wsj.com ...
I’m not buying it, either figuratively or literally.
The stock market today is nothing more than a heroin addict, with a very generous pusher.
I don't think of it that way. We're five years in recovery from a crash...there is no where to go but up.
On top of that, Obama has done everything he can to kill the U.S. economy.
The real bull market will be that period following the election of a conservative, pro-business president!
This would be good news if the federal government weren’t screwing around with the market. I can’t have any faith in this market.
My perception is that the whole ball of wax depended on whether the government could convince folks it was sound.
Well, they did, for the most part. I’m not buying it.
How much of the market is owned by our federal government? I don’t know. If I did, it might scare the hell out of me.
Yep, its been good. Thank God for capitalism!
Are the numbers adjusted for inflation? If not, then they have to be adjusted.
With interest rates so low there is nowhere else for money to go. In cash you lose to inflation. In bonds you will get hurt as interest rates rise. I see no other option but a conservative amount in stocks to stay afloat with lots in cash and a lot in low interest bearing instruments which is almost cash. One has to be able to ride the roller coaster for the stock portion. There are few options to park the money. Of course I am older and concerned with protecting what I have. If you are young you have more freedom to invest more aggressively.
That’s a valid concern. Larry Kudlow had a couple of guests on his radio show who brought a different perspective. Their general point was that the strength of the stock market is real, and it’s driven mainly by the ability of these large companies to increase profits dramatically with very little increase in their costs. Basically, there is such a glut of labor for many of these industries that a company can increase its productivity without hiring more workers or paying their existing workers more money.
Just keep pumping Mr. Fed! What could go wrong...
With interest rates so low there is nowhere else for money to go.
Another counter is that if the government does take over the retirement industry, exactly who is going to be buying the stock in my retirement plan. To paraphrase the Vampire economy regarding German stock trading in the late 30.s , “The stock market was still active but everyone knew it was a lie.”
But wealth does not provide cash anymore. A million dollars will only provide $10,000 of income, you have to think about that awhile.
Indeed once the presses stop the tumble starts.
Volume is dropping.
I’d say courtesy of about 5 years of $85 Billion per month feeding the market through purchase of MBS’s and T-Bills.
FIVE TRILLION DOLLARS OF OUR MONEY. What’s not to be ‘Bull’ about that?
Oh that John Semmens and his . . . wait, what? This isn’t satire?
Yep. Remove the illegal $4+ trillion the fed dumped into the markets and test what the valuation would be. Remove the $18+ trillion in debt and watch the markets tank. Remove the $4 trillion annual budget and watch the markets tank.
WSJ is for whomever and whatever perpetuates the financial markets gaining wealth, legal or illegal.
My IRA grew by 11 grand in the month of February. I’m thinking of switching it to all cash, any suggestions from savvy investors?
They don’t want to bite the hand that feeds them.
I just hope it stays up until my Mom’s estate is done. She unfortunately died in November and the estate should be done by Summer which means turning in the Mutuals, 401K, stocks, etc and splitting 3 ways with my Brother and Sister. I don’t think it is bad thinking you want to cash out at the highest possible amount.
Indeed no shortage of them.
I have been taking some profits over the past year.
In accordance with the strategy known as “asset allocation,” you might want to keep some money in equities, and the rest in bonds, cash, or equivalents. The general rule of thumb is that your age minus 10 is the percentage to keep in cash and bonds.
In other words, if you’re 40, then keep 30% in bonds, the rest in equities. If you’re 70, then the percentage is 60% cash and bonds.
The theory is that the older you are, the less time you have to recover from a market setback, while if you are younger, then you need the compounding power of equities to build wealth.
Of course, your mileage may vary, depending upon your risk tolerance and total portfolio value.
In my case, I’m 64 years old and have been a long-term buy-and-hold investor for nearly 40 years. I’ve been through Nixon, Ford, Carter, Reagan, Clinton, two Bushes, and Obama. During that time, equities have roughly quadrupled the amount of money that I originally invested.
That includes the Dot Com bubble burst and the 08-09 meltdown. I didn’t bail out in either case, and actually added to my equity positions.
If you study the entire history of the markets for the past century and a half, it is evident that equities have been the best vehicle for creating wealth, compared to any other - bonds, commodities (including gold), land, etc.
There is no substitute for long-term disciplined investing. Obama one day will gone, and a business-friendly administration will be in office.
Never underestimate the wealth creating ability of the American Businessman and the creativity of Free Enterprise.
Good post - thanks.
It’s turning into a bubble caused by cheap money printed by the Federal Reserve. With inflation-adjusted interest rates negative on bank deposits, the average Joe is compelled to save for his new car, water heater replacement, etc., by purchasing stocks.
U.S. business, especially the large corporations, will always find a way to make money no matter which party is in office. People are only hurting themselves by not investing in something. There are many ways to wealth - your own business, rental properties, the stock market, etc. But the key is to invest in something! I was raised by very conservative parents, and I have learned by example to live within my means and to invest for my future.
I strongly recommend The Bogleheads to folks wanting to know more about slow and steady investing for the future. Their website is an invaluable resource of information about asset allocation, selecting low cost index funds, etc. The Bogleheads has both an informative Forum and informative Wiki. Check them out!
Rule Number 1: Spend less than you make, and save/invest the balance.
Rule Number 2: See rule 1.
Unless and until you observe, without fail, the two rules listed above, no investment/wealth creating strategy of any kind will work.
Market timing is a lot of work. What I did for my IRA funds long before retiring was to just dump it all into a stock fund and fuhgeddaboutit. Long term profits average 7% yearly--
--but any individual year can vary so most people only go to cash when they want to be able to know what next month's balance will be.
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