David Vomund


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April 8, 2013
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Market Pulse: All aboard the U.S. stock market

INCLINE VILLAGE, Nev. — The world has been “discovering” the U.S. stock market since last fall and driving prices ever higher. You know the reasons — paltry bond yields, low rates on CDs, trouble overseas, etc.

You’ve been hearing about them for a few years and they are as valid and price boosting today as they were before. Individual investors are returning ... finally! Equity ETFs took in $65 billion during the first quarter.

One of my concerns is that there is hardly a negative word to be heard other than from the usual perma-bears who have somehow built careers while routinely forecasting events that never happen.

Few professionals even mention the trouble in Europe, North Korea, Iran and other hot-spots. No one seems concerned about what will happen when the Fed stops buying bonds and mortgages and begins to shrink its balance sheet. The weak economy? Jobs?

I can recall many times when sentiment was overwhelmingly one-sided, sometimes on the bull side (1999) sometimes on the bear (March of 2009). Those who leaned against the wind had it right.

So I am a bit troubled that almost everyone sees prices going higher. Such a huge majority is seldom accommodated. Then again, TINA (There Is No Alternative) could trump everything and drive prices up. In fact, I believe it will. I am still in the bull camp until investors sense that rates will be rising soon. That day is far off.

One reason is the dismal March employment report. Economic weakness means the Fed will not be raising rates anytime soon. How could they?

This year’s best sectors have been health care, consumer staples and utilities, the latter (plus 14 percent year-to-date) reaching a four-year high. All three sport above-average yields and that explains much of their strength. Investors like dividends and dividend growth. More than ever, it seems. The worst sectors have been those sensitive to the economy.

Bottom line: The positives still outweigh the real or potential negatives and stocks will make their way higher as multiples expand and investors buy for lack of an alternative.

When some of the perma-bears hop aboard the bull train, that will signal the end is near.

David Vomund is an Incline Village-based fee-only money manager. Information is found at www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.


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Tahoe Daily Tribune Updated Apr 15, 2013 10:48AM Published Apr 8, 2013 04:58PM Copyright 2013 Tahoe Daily Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.