Yet, I continue to hear that this market has gotten absolutely no respect. It’s been the most unrespected bull market in history. No respect I tell ya!
That’s why it has been named it the Rodney Dangerfield of Bull Markets. Named after comedian Rodney Dangerfield who used that very line in all his standup comedy routines.
Why is it that this bull market has not won over the hearts and minds of investors?
Stocks have been benefiting from an ongoing economic recovery, historically low interest rates and stocks trading at below-average price levels vs. corporate earnings. The current bull run has generated $10.5 trillion in wealth since the bear market ended, according to Wilshire Associates. Times are good, right? So why the love loss? I have an idea.
Fear of the next big disaster
I think it’s this simple. Since 2008 Credit Crisis investors have been waiting for the next falling dagger. Investors have had enough over the last decade. With the Dot Com Bubble and the Credit Crisis, investors are just fearful of the next big disaster. The longer this bull runs, the more fearful people become. The logic is: that we have ran so far so fast, that surely we will have a market correction. And boy, will it be a big one. Needless to say, investors lack trust in this bull market, because of being burned before.
Investors may be focused on the wrong stuff
Some investors may be focused on short term volatility . During the bull market run since 2009, investors have continued to pull money out of stocks and place that money into bonds. Just when things were pressing higher and higher. Many have also feared a correction so much, that they have moved money to cash equivalents in banks paying zero interest. In addition, there are so many doom and gloom headlines and predictions. It’s no wonder investors have focused on the wrong stuff.
Market rally driven by policy and lawmakers
Investors have not given this market rally respect because it’s been largely driven by policies and actions of central bankers and Congress. Namely the Federal Reserve and the European Central Bank. Some would argue that the gains are artificial. Inflated stimulus into the markets by bankers and policymakers.
Keep in mind the stock market is not wildly overvalued. Today the market is trading at about 13 times estimated earnings for 2013. The long-term average is around 15. I’m not sure if investors will start to get their taste back for stocks or not in 2014. I’m also not sure if investors will give this market some respect, 2014 should tell the story. Investors now must ask the questions: Is it too late to get in? Or is this the start of a second leg up for stocks?
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