The most popular method of assessing the stock market’s performance, past and potential, is to look at data, and if that’s your approach, you’re in luck – only sports can rival stocks for generating towers of numbers to ponder.
By those measures, it’s an optimistic time. The Dow Jones industrial average trades around 14,000, essentially reclaiming all the ground lost in the recession. The broader S&P 500 is almost back to where it was in 2007. The Nasdaq composite index is actually above pre-recession levels (we’ll overlook for the moment the unhappy fact that the index is, even at these lofty levels, down about 30 percent from the pre-dotcom bust).
How are some local favorites doing? Columbia Bank has had a decent run since mid-November. TrueBlue has done even better over the same period. Weyerhaeuser has nearly doubled in price since autumn 2011, reflecting a sense that the housing market (which the company plays in through production of building materials and its own real estate developments) may finally be recovering.
But there’s another way to take the stock market’s temperature. To use technical terms, call it qualitative analysis vs. quantitative analysis. To use layman’s language, call it feelings rather than numbers.
Journalists are no more talented at interpreting financial data and making investment decisions based on those numbers than anyone else – if we were we’d have different jobs, and be very wealthy because of it. But we are well-positioned to gather anecdotes, impressions, comments, seemingly random individually but which in the aggregate give a sense of what consumers and investors are thinking, what their mood is.
And based on that, here is one conclusion we can make about the public’s attitude toward the stock market: They don’t care.
If this is a bull market – and measured from the deepest point of the recession’s trough it certainly looks like one – this is the most unenthusiastic, uninspired, lackluster, largely ignored bull market we’ve seen in many years.
Here is what life is like in a typical bull market for stocks, at least from the journalistic point of view. Readers can’t get enough stories about the latest hot sector (Dotcom! Cellphones! Microbreweries! Real estate! Social networking sites!). They’re clamoring to get in on every IPO, even if they can’t pronounce the name of the company or describe what it is the company does. Virtually every company, no matter how new, small and unproven, is talking IPO. After every feature story about a local company, readers call in asking how they can buy stock in it, even if it’s new, small and unproven, even if the company is privately held and has no intention of going public. Even obviously distressed companies generate calls from readers wondering if there’s a bottom-fishing opportunity to get in on a potential turnaround.
Here is what life has been like in recent months, at least in terms of the interaction between readers and one business columnist. Readers are not shy about offering their perspectives and commentary about commentary (and good for them and thanks for doing so) on subjects including interest rates, the community’s long-term economic prospects, energy, punishment for malefactors in the banking industry.
On the stock market, though – not a peep.
The lack of discussion of that topic is perhaps more telling than the abundance of it in a “normal” market surge, and on further reflection it’s understandable.
First, much of the investing public trained itself during the recession to shut out at least one source of bad news. “I don’t even look at my 401(k) statement anymore” was a frequently sung refrain in that period. If people do open the envelopes these days, they might be surprised to find they’re not doing badly.
Then again, it’s hard to whip up a lot of enthusiasm over just financially clawing back to where you were five or six years ago, as though half a decade never happened.
Beyond that, it’s going to take a long time for investors to be convinced that the market is worth paying attention to, not so much because of financial performance but due to the financial sector’s unseemly behavior. Memories of Wall Street creating and trading investments it didn’t understand and never assessed for risk will not soon be erased. If anything those memories will be refreshed by recent scandals such as the Libor rate-fixing scheme, suggesting that Wall Street not only isn’t cleaning up its act but has no intention of doing so.
Whether it’s cause or effect, the recent tumble in Apple’s stock price and the Facebook IPO debacle signal that, unlike other boom markets, cool is no longer enough to justify a frothy stock price. And recent economic and corporate news gives many investors reasons to doubt the sustainability of the market’s recent performance.
The only reasons investors haven’t walked away from the market entirely are that the alternatives for their money are equally unappetizing (looked at the interest rate your savings account is paying lately?). And who wants to sell low anyway?
But it may be awhile before the public’s to “Hey, I’ve got a hot stock tip for you,” is “Really? Tell me more!” rather than “yeah, sure, fine, whatever.”