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Tahoe market pulse: The bull market is alive and well

David Vomund
Special to the Bonanza

The stock market shook off the waves of selling last fall and in January and closed at a new high last week. Growth is outperforming value and the healthcare sector is performing best. There are even better days ahead.

News on the economic front is giving mixed signals. Jobs are being created and wages are rising, though the percentage of Americans with full-time jobs is at an all-time low.

In December, consumer spending fell the most since September 2009. Economists thought the fall in gasoline prices, like a huge tax cut, would let people spend more elsewhere.



No sign of that so far. The ISM report on the manufacturing sector for December had its worst reading in a year. Productivity fell at a 1.8 percent annual rate in the fourth quarter.

Despite indications from Janet Yellen to the contrary, it is possible that short-term rates will not rise by mid-year, as many had thought, and maybe not at all this year. Why would they?



The dollar has been rising and would rise further if rates were higher. Our trading partners would suffer even more.

Inflation is a non-event and economic growth remains slow to at best modest. For nine years GDP growth has been below three percent. Never has there been such a slow-growth string since record-keeping began.

After the 1981-82 recession, growth exceeded 7 percent for five quarters and averaged more than 4 percent for most of the 1980s. Now 3 percent growth seems a lofty goal.

Median real household income has fallen by $2,000 since 2008, a sign that life for the middle class is not improving, never mind record stock prices and the bond rally.

I guess that is why the majority of Americans believe we are still in a recession even though the last one ended in 2009.

For investors, as I’ve been saying for more than a year, the major risk is not that interest rates will rise, it’s that growth won’t accelerate or worse will slow.

Rising concerns about that periodically inhibit the market’s advance as people move to the sidelines.

Not for long, I suspect. What choice do they have?

David Vomund is an Incline Village-based fee-only money manager. Information is found at http://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 adviser before purchasing any security.


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