As
we survey the myriad news headlines concerning the global economy, one would be
hard pressed to come up with a bullish case for stocks in the first quarter of
2013. Yet the same thing could have been
said in 2012. Indeed, an investor might
reasonably ask, “Why, with all of the international, economic, governmental and
corporate concerns, did the major averages produce stellar returns, though with
a lot of volatility?”
I
believe Art Huprich of Raymond James nailed it on the head when he answered,
“performance anxiety.”
As
with 2013, stocks opened last year sharply higher, which put many money
managers behind the proverbial eight ball.
In order to catch up to the market they were forced to put sidelined
money to work. This year opened in
similar fashion and already money managers have been feverishly buying stocks
in the hopes of boosting their quarterly performance. Performance anxiety can ignore a multitude of
economic – even corporate earnings– sins.
This is one reason why I don’t think we should underestimate the
market’s near term potential.
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