Wall Street: Riding the 2013 bull market

 

The value of IBM stock has increased 80 percent over the past five years. The computer industry giant, which is the highest valued company traded on Wall Street, generates about half of its revenue outside of the United States.


U.S. stocks have hit an all-time high on Wall Street, with the Dow Jones market closing Tuesday's trading at 14,253.77.

A month ago, when the Dow rose above 14,000 points for the first time in five years, this blog predicted a bull run in 2013 as opposed to the stock market collapse that followed the Dow's previous all-time high, 14,164.53 on Oct. 9, 2007.

While Bullwork remains bullish on 2013 and the Dow has already gained 8.8 percent this year, economy watchers at home and abroad should remain cautious about Wall Street:
- Beware of irrational exuberance: The U.S. economy has come a long way in recovering from the Great Recession, but economic growth and the job market remain sluggish with no indication of brisk growth on the horizon.
- There is nowhere else for investors to go: With historically low interest rates driving down bond yields and the housing market still lifting itself off the floor, stocks are the best bet for investors looking for a significant rate of return in the U.S. economy. Even overseas markets look worse than Wall Street, with the European Union riding out its debt storm, growth uncertain in China and India, and corruption casting a shadow over the Russian economy.
- Watch out for Washington: The ongoing congressional gridlock over the U.S. federal budget is going to catch up with the national economy eventually. The longer the ineptitude and self-serving politicking continues, the higher the risk.
- Consumers remain key: Consumers drive the vast majority of U.S. economic activity. Most consumers have more money in their homes than in the stock market. Until the housing market is in full recovery, U.S. growth will be restrained.