by John Simons

March 9, 2011

The Stock Market Rally Lives On. But Can It Continue?

  • Joe A. Gilbert, CFA, portfolio manager,
    Integrity Asset Management, LLC
  • Cleveland, OH
  • YES.
  • “I’m still positive on the market at current valuations. Earnings will grow because of growing sales. Admittedly, most of the ‘easy’ money has already been made and the returns from here will be more modest but this does not portend to a declining stock market. We are in a maturing bull market, which requires investors to be more selective. But opportunities remain. The outcomes from geopolitical events are more binary but oil at $105 is untenable hence I believe that once oil corrects the market will go higher. Economic expansions typically last seven years and we are only in the second year of this expansion. The Federal Reserve is continuing to provide liquidity and the Obama administration has introduced more simulative policies (i.e. payroll tax cuts, accelerated depreciation). Additionally, the NFIB Small Business index has increased and the unemployment rate has just started to recede. Businesses have started to hire again and reinvest in capital equipment after a period of under-investment. There is continued positive business momentum and the economy is still operating substantially below potential output levels. Bull markets historically die on optimism and grow on skepticism and there is plenty of skepticism surrounding this market now.”

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