The Great Big Nothing

Interesting factoid from the Wall Street Journal:

The broad S&P is up only 2.8% since the year began. The Dow Jones Industrial Average and Nasdaq Composite Index are even flatter for 2014, with the Dow up a tiny 0.18% and the Nasdaq up 0.22%.

It is rare for all three indexes to be up or down less than 3% this far into a new year. Before now, it had happened only twice, in 1980 and 2010, since the Nasdaq Composite’s first full year in 1972, according to Bespoke Investment Group.

Both those years, like the current one, were times of economic anxiety. In 1980, investors faced stagflation. In 2010, the worries were similar to the current ones, focusing on U.S. and European prospects.

In my view, this speaks to the indecision inherent when a gradually (but definitely) improving economy meets a fully valued stock market. If the economy picks up speed in the next few years, we’re not so expensive. If it plods along as it has been, we’re probably a bit stretched – especially in the US. The good news for bulls, as the article’s author E.S. Browning relays, is that in both 1980 and 2010, the eventual resolution for stocks was higher – greater than 10 percent rallies in each case.

But since the data is so stubbornly neutral right now and we’ve nothing else to be excited or despondent about, the current result is a Great Big Nothing – a slow-paced, no-volume grind through all-time highs as sentiment waffles day to day, depending on who sneezes into a microphone somewhere or which data point is mildly surprising to its constituent watchers.

Enjoy, I guess.

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