Tom Petruno, stocks, investing: This is the unhappiest bull market ever

The unhappiest bull market ever

U.S. stocks keep advancing, yet it's hard for many investors to enjoy the ride.

By Tom Petruno Market Beat

February 12, 2011


The symbol of Wall Street's late-1990s bull market was the giddy dot-com start-up.

The housing bull market of the last decade will be remembered for the "no income, no job, no problem" mortgage. Good times!

For the current U.S. stock bull market, the defining image may be of a grimacing investor, shoulders shrugged in resignation.

Let's face it: If you're on board for this ride you're making money, but it's not really fun and you might rather be earning 6% a year on a bank CD, if only you could.


This may be the unhappiest bull market ever. We love to hate it, but that may be just egging it on.

U.S. stock indexes climbed this week to new multiyear highs. The Standard & Poor's 500 index now is up 96% from its 12-year low reached in March 2009, when the world was supposed to end, but didn't.

Just since the start of this year the S&P is up 5.7%, despite constant catcalls from disbelievers who warn that it's all going to come crashing down, and soon.

Yes, the economy has improved since September, when the latest leg of the rally began. The manufacturing sector is booming, retail sales remain surprisingly strong and corporate earnings continue to expand.

But jobs still are extremely hard to find, which understandably makes the idea of a sustainable recovery seem inconceivable to many Americans.

Yet instead of investing in sackcloth and ashes, some people are back to betting on the Happiest Place on Earth. Shares of Walt Disney Co. rose this week to an all-time high (at least before inflation) of $43.41, finally topping the previous high of $43.04 reached in April 2000.

The catalyst for the stock's latest surge was Disney's report that fiscal first-quarter earnings rocketed 54% on a 10% rise in revenue.

A new high for Disney amid the Unhappiest Bull Market on Earth. Go figure.

Admittedly, it's far easier to be bearish than bullish on U.S. equities. That has been true nearly every minute of the market's run-up since March 2009. But then, it's almost always true on one level or another, says Jason Trennert, chief investment strategist at Strategas Research Partners in New York.

"Bears always sound smarter than bulls, a distinction greatly enhanced with a British accent, real or affected," Trennert says, with tongue half in cheek.

This time, one oft-recited refrain of the bears is that the stock market and other assets are floating on the sea of money the Federal Reserve has unleashed in the financial system, thanks to short-term interest rates near zero and the central bank's ongoing purchases of about $100 billion a month of Treasury bonds.

There's a reason why "Don't fight the Fed" has endured as one of Wall Street's favorite maxims. When money is loose, asset prices tend to rise.

And Fed Chairman Ben S. Bernanke hasn't made a secret of his desire to see stocks rally. Higher share prices may not keep the economic recovery going, but they can't hurt.

So the upshot of the bearish case is that the stock market's advance is phony because of the Fed's massive support — or perhaps just phonier than it normally is when monetary policy is easy.

Meanwhile, even optimists have to wonder how the economy, and the market, will overcome the daunting challenges on the near horizon: the mind-boggling U.S. budget deficit; state and local government spending cuts that will leave tens of thousands more jobless; Europe's austerity plans; and the rising food inflation bedeviling emerging-market economies.

But seemingly forgotten by the bears is that Wall Street got exactly what it wanted in the November elections and their aftermath: Republican control of the House, extension of the Bush-era tax cuts (including on capital gains and dividends), a payroll tax cut and a business-friendlier Obama administration.

Granden at 2:01 PM February 12, 2011

LA Times readers need to just keep quiet about economics, because most are such economic illiterates that it is embarrassing.  Assuming these post represent the "thinking" of a large number of people--and I believe it does--this makes me alarmed about the future of this country.  The real Alexander Hamilton would turn over in his grave to know that such an idiot is using his name, and the three posts that follow his name are even more uninformed.  If you don't know anything, don't embarrass yourself!

Computer Forensics Expert at 1:18 PM February 12, 2011

1.  Two years ago, the market shaked-out all of the suckers.  Can you say "Margin Call" or "Fed Call?"


2.  People who got laid-off, didn't have sufficient savings set-aside and cashed-out their 401k's.  Ever wonder why there are so many advertisements to settle one's debt's with the IRS?


3.  People who are working, have realized that with the Obama Administration spending like drunken seaman (sailors aren't making much these days) we are hurting.  With the projection of Social Security being out of money in 24 years and Medicare may croak before then, people are stashing their money on their 401k's and IRA's.


4.  Forget 6%, I remember when CD's were paying 20%.  I am happy getting a 15%+ return on Hatteras Financial and Annaly Corp.  Savings accounts are for suckers.


5.  We know that Obama is a short-timer and when congress and the executive branch go all red, watch the economy take off.


Have I made money in this market?  I am well on the road to retirement at the expense of the suckers, looking for short-term nirvana!!!!  I'll gotten gains?  I think not.  I've paid my dues, learned my lessons and am enjoying the fruits of my labor.

Alexander Hamilton at 11:29 AM February 12, 2011

My take is that the market is ahead of itself due to the "volatility" that is making everyone so unhappy. If I am not mistaken, the DOW shot up to around 11,400 last April before dropping back down near 9,600 a few months later. I don't believe anyone is expecting the bottom to fall out, but that everyone IS expecting the same or similar this year, hence, the uneasiness.


My guess is that come December the market will be sitting right about at its current levels and we'll all breathe a sigh of relief and realize it was another good year for investing.


And to answer "mr. gittes " question, the markets were vastly over-sold two years ago. It was clear that that was the time to back up the proverbial truck, but it took some serious cojones to do so after the crash. Monies lost were VERY real and the thought of losing even more kept most people from jumping back in. My problem was that I didn't have a lot of spare cash to be speculative, but what I did invest in the market has mostly made very good returns.

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