IS THE BULL MARKET RUNNING OUT OF RUNWAY?
Is The Bull Market Running Out Of Runway?INVESTING | OCTOBER 29, 2013 | BY ROB RUSSELL
One of the most dreaded fears of an airline pilot is runningout of runway. With the S&P500 up over 20% year todate, a lot of investors and advisors are questioningwhether this bull market is running out of runway.
There’s an intense smell of pessimism and disbelief in theair from everyday investors about this bull market draggingon too long. While I too certainly feel that this market hascome a long way from the lows of March 2009 there’s noroom for emotions in investing , so let’s examine five factsthat may prove the case for a continued bull run throughyear-end:
1. Lack Of Options ‚ÄìIt may come as no surprise that withinterest rates still near zero and bond prices near 30year highs there’s few alternatives to owning high qualitystocks. With liquidity, potential growth, and a better yieldthan banks or bonds many investors have flocked (andwill continue to flock) to strong dividend paying U.S.multi-national company stocks.
2. Success Leaves Clues ‚ÄìAccording to the yearlymember survey * from TIGER 21 (which is a 200 membernationwide network made up of ultra high net worthinvestors with total assets of $20 Billion) public equitiesrepresent their largest holding at 41%. They’ve increasedtheir allocation to stocks over the last 2 years.
3. Easy Money ‚ÄìSince the Fed’s virtually limitless stimulusplan appears to be full throttle through year end they’vegiven stock investors a green light for entering the marketeven if they’re late to the party.
4. Less Is More ‚ÄìU.S. company earnings in the 3rd quarterhave held few surprises except on the upside becausecompanies have learned to produce more earnings andrevenue with less employees and overhead. They’vedriven far more value with less cost and consequentlytheir stock prices have been rewarded.
5. U.S. Leads the Innovation Race –The U.S. continuesto lead the way in innovation across a multitude ofindustries despite the maligned intentions of Washingtonpoliticians. Companies like Tesla Motors TSLA +0.75%with the longest lasting, safest and fastest electric caror Life Technologies LIFE -0.01% which developed themost rapid DNA testing program worldwide or AlexionPharmaceuticals ALXN -2.82% which has emerged asthe Global leader in providing treatments and potentialcures for rare life-threatening diseases. These are justa sample of the many U.S. ventures creating gamechanging innovations.
You come across the opportunity of a lifetime aboutonce every week. The same could be said about thenext market dislocation. While I do not subscribe to aneconomic recovery in general terms, it’s hard to arguethat the market hasn’t recovered and continues to forgeahead…at least in the mid-term.
DISCLOSURE: THE AUTHOR, HIS FAMILY, & HIS FIRM OWN POSITIONS IN LIFE AND ALXN.*”WHERE THE WEALTHY ARE INVESTING NOW”, WALL STREET JOURNAL, 10/22/13READ ONLINE: HTTP://WWW.FORBES.COM/SITES/ROBRUSSELL/2013/10/29/IS-THE-BULL-MARKET-RUNNING-OUT-OF-RUNWAY/
