Birinyi: Stock Market Rally Will Run a Few More Years

Tuesday, 19 Feb 2013 08:41 AM

By Dan Weil

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Stocks have soared 128 percent during the bull market that began in March 2009, and equity guru Laszlo Birinyi, president of Birinyi Associates, expects the party to continue for one to three more years.

He doesn’t pay attention to many of the fundamental factors that influence other prognosticators. Instead, he puts market statistics together with some of his own judgments, The New York Times reports.

For example, Birinyi looks at investment flows into and out of stocks, and he monitors business news to discern investors’ mood.

Editor's Note:
 
'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

“We don’t worry about the cosmic issues that a lot of people get concerned about,” Birinyi tells The Times. “We worry about the stock market ticker. And it’s telling us the market is going up.”

For one to three more years anyway.

Bull markets have four phases, with the final one being exuberance, he says. That’s the phase we just began, Birinyi says.

“This is a point where people say, yes, the economy isn’t going into recession right away, companies are making money, interest rates are not going through the roof and all the concerns we have had for some time perhaps were too negative.”

When that exuberance gets irrational, it’s time to head for the hills, he suggests.

“The market isn’t like the New York subway system. There isn’t another train coming right after this one. This is it, this is the last train. You’d better get on board,” he warns.

As for what is driving the market, Birinyi notes, “It’s the Fed, always the Fed,” adding that the Federal Reserve will keep its loose monetary policy, which will make stocks more desirable.

Some other analysts look for at least a short-term correction in the equities after their surge to five-year highs.

The stock market’s recent gains have been fueled by the Fed’s massive easing program, says Mohamed El-Erian, CEO of Pimco.

“We think that [stock] prices are artificially high, that maintaining them here is going to be hard as central banks become less effective, and that it’s time to book some profits and to wait for some better entry points,” he tells Yahoo.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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