Laszlo Birinyi is bullish on 2013. The president of Birinyi Associates Inc. says that individual investors will finally give up their fears of the market and push the S&P 500 to record levels.
He says a bull market began in March of 2009 and it has developed along the same lines as the 15-year run that began in 1982.
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The bull runs that sprang out of 1982 and 1992 ran for four or five years before consolidating or correcting. At this point in the 2009 bull market, investors have made back $8.4 trillion of the losses handed them by the 2008 financial crisis.
Individual investors have been fleeing the markets since the crisis, favoring high-yield bonds and other income producing investments instead.
But bond fund flows are slowing because the glut of investment has made it more difficult to find attractive yields.
And technical analysts will tell you that markets always climb a wall of worry. Then, individual investors tend to see the markets running past them and decide to finally join the party.
That’s what Birinyi says will happen in 2013. Over the last four years, individual investors have pulled $275 billion out of equity mutual funds. Daily volume on the stock exchanges over that same period has averaged at its lowest since 2008.
After the Great Depression in the 1930s, the S&P took 25 years to reach a new high. Since that time, it has done so on average only three years. It’s now been five years since the market’s October 2007 high.
Investors are still cautious because of economic uncertainty surrounding the fiscal cliff. But once that clears, Birinyi thinks the bull market
in 2013 will not end there.
If this bull market indeed is similar to those in 1982 and 1992, 2013 will be the fourth year and Birinyi's prediction just may be right.