Stocks Least Loved Since ’80s as U.S. Scales Wall of Worries

Although the major markets are off to a hot start this year there still seems to be a sense of caution in the air around where the markets are headed.  After two major blowup’s since 2000 investors have plenty of reasons to be cautious.  However if you hadn’t notice the DOW and some other indices are back up to their 2008 highs.  Just since October the markets have rallied about in excess of 20%.

As I noted in a piece yesterday [February 7, 2012 Itchy Investors Ramp Up Risk] savers are getting left in the dust and in many ways getting forced into risk investments such as equities in order to find yields and returns that they need in order to make it in or to retirement or other savings goals.

A piece in Bloomberg notes the pessimism within the equity markets noting Stocks Least Loved Since ’80s as U.S. Scales Wall of Worries

• “Investors are scared to death,” Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc., which oversees about $370 billion, said in a telephone interview on Feb. 3. “The fears are justified, but from a valuation standpoint the market has overshot, as it typically does. We’ve been pounding the table to put money into equities.”
• Sentiment has deteriorated even as the S&P 500 rose 99 percent since March 9, 2009. The 106 percent expansion in U.S. earnings during the last nine quarters, the most since 1987, helped fuel the rally. For the period ended Dec. 31, 67 percent of companies in the S&P 500 beat analyst profit estimates as earnings advanced 3.3 percent.
• Concern European leaders will fail to keep Greece from defaulting, the May 2010 flash crash in which $862 billion was erased from equities in less than 20 minutes and some of the most volatile markets on record last year helped spur the withdrawals. Of the more than $11.1 trillion that was wiped off U.S. shares between 2007 and 2009, $8.1 trillion has been restored.
• “It was the severity and the quickness of the fall and how long it’s taking to come out of the trough that’s been adding fear and anxiety,” Warren Koontz, head of U.S. large-cap value stocks at Loomis Sayles & Co. in Boston, which manages about $160 billion, said in a telephone interview on Feb. 3. “Over time, if things continue to progress on a step-by-step basis, people will come back to stocks.”
• After stalling for 17 years, the U.S. stock market staged the biggest bull market in history through early 2000, driving the Dow up 15-fold from its low point in 1982. The surge coincided with a decrease in the yield on 10-year Treasuries to 6.68 percent from 13.55 percent. The rate was 4.21 percent at the end of 1964, and it peaked at 15.84 percent in 1981. On Feb. 3, the figure was 1.92 percent.