Is This Bull Run Done?

Bull and Bear Blog artIs it really over?  Are we really done with one of the best bull markets in the history of stocks?

Not quite, and certainly not yet.  Markets climb a wall of worry, the old saying goes, and Russia’s bullying in Ukraine is reason enough to startle the gazelles of Wall Street.  Neither bulls nor bears, they flinch at every headline.  The Dow lost 2.4% last week.  The Nasdaq fell 3.1% and is down 8% since hitting a 14-year high on March 5.  The Dow rose 146 points yesterday and was up at the open this morning, but they are wobbling yet again.

Still, it could be easy to lose your nerve here.  But as I’ve said before:  Capitalism is optimism, monetized.  You don’t invest unless you have hope that good things will result.  So herewith, a little hope.

At Dow 16,000 we still are only 13% higher, peak-to-peak, than where we were before the collapse of 2008.  A full six-and-a-half years later.  Yet the economy, both locally and globally, is in vastly better shape than it was when we took that terrible tumble, down to Dow 6,800 in March 2009.

Americans have cut back on how much extra debt they assume, and companies have refinanced hundreds of billions in debt that will help their bottom lines. (This is an update to fix my incorrect assertion that debt is “lower,” see @tickerguy chart here:    Banks have amassed more safety capital and have reduced the leverage of their bets.  Corporate debt has been refinanced at the lowest rates in 40 years.


Another difference from 2008:  America has emerged as a world energy titan thanks to the nat-gas fracking revolution.  Once again we are the world’s pace-setter in technology, this time for drilling.  Nat-gas production is surging despite a disapproving President and fear-mongering greenies.  Eventually we will all but eliminate U.S. dependence on foreign oil from the Mideast nations that hate us.

In tech, we could be on the brink of the Next Big Thing.  For consumers, a new platform beckons to succeed the smartphone, which hit the late-life stage of mass saturation and utility-like, slower growth with alarming speed.  Google Glass and Facebook’s $2 billion buy of nascent virtual-reality goggles startup Oculus are part of that search.

For businesses, the Internet of Things augurs a new wave of productivity increases.  Imagine the meter man (alright fine, or meter-woman) no longer having to visit each home to check the electric readings when the gadgets themselves zap their results to the utility’s computers.

Meanwhile, more companies and individuals than ever before are online and in social networks, setting up the largest bazaar in world history.  Now that over a billion people are under the same tent of Facebook, businesses can sell them more stuff.  The Financial Times reporting this morning that Facebook is mulling selling financial services to its friends.  It has filed in Ireland for regulatory approval of online financial transactions.   (A Facebook bitcoin?  I’d trust it more than that ethereal thing now floating out there in cyberspace.)

In addition, the biggest, most dominant companies are locked in a flurry of ever-fiercer competition with one another, rather than sitting back, fat and indolent, and avoiding offense.  Amazon wants to make a smartphone.  Google wants to make computer-glasses and driverless cars.  Apple and Samsung are hammering the hell out of each other in smartphones.  Netflix, Hulu, Amazon (again) and Yahoo are pushing original programming to compete with Hollywood.

Overseas, Europe clearly is on the mend, China’s growth is stumbling but still is at 7%, and the rest of Asia is on the rise to offset China sluggishness. And with the skittishness in stocks right now, new buying opportunities are emerging day by day.  Now imagine if some new, positive change to the entire picture could unlock a new run upward.  Say, a victory in the November mid-term elections for candidates who embrace business rather than bash it Obama-style.

So what’s to worry?  This bull is getting old, that’s true, but it’s still a bull, and I’m thinking it still has room to run.

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