New market highs, but no raging bulls

Wall Street's bull market is now the third longest in history.

But it's not an animal anyone is getting excited about – even after the Dow Jones Industrial Average closed above 14000 Thursday.

Instead, excuse the yawn, it is a bull more akin to Ferdinand, the storybook creature who would rather stop to sniff the flowers, catching its breath.

The market has been rising since Oct. 9, 2002, despite low approval ratings for Congress and the president, the rising price of oil, and the war in Iraq. Not surprisingly, individual investors have more or less ignored this Ferdinand and thus have not profited from it as they have in previous booms.

"Anyone who reads the paper would be amazed [to learn that] we are in a five-year bull market and the economy is growing at all," says Jeffrey Kleintop, chief market strategist at LPL Financial Services in Boston. "By many measures it's so weak no one believes it's happening."

This market is only the 12th strongest since 1900, Ned Davis Research estimates. "It's been a slow ascent instead of a raging bull market," says Ed Clissold, senior global analyst at the Venice, Fla., stock research firm.

Last week was actually a mini example of the market's behavior. After slowly rising the first part of the week, the stock market kicked into high gear on Thursday, pushing the Dow to a 14000.41 close. Then, on Friday, the venerable average fell 149.33 points, closing the week with a slight loss.

"It seems like we've been going three steps forward and two steps back all year," says Georges Yared, chief investment officer of Yared Investment Research in Minneapolis.

In fact, despite the Dow's rise of about 6,500 points since its low point in 2002, individual investors have not piled into the market with the enthusiasm they had in the 1990s. The number of individuals owning equities has increased by only 5.2 percent since 2002, compared with a gain of 24.5 percent between 1995 and 1999, according to the Investment Company Institute, a trade organization in Washington for the fund industry.

"It seems the individual investor is not in this market in a full-fledged way," says Mr. Yared.

One reason for the blasé attitude might be the relatively narrow gains in the market – at least in the latest spurt. Since April 25, when the Dow was at 13000, the average has climbed 8 percent, but the broader Standard and Poor's 500 index is up less than 4 percent. "The move from 13000 to 14000 is mainly a cyclical move," says Sam Stovall, chief investment strategist at Standard & Poor's in New York. "The cyclical stocks are up, reflecting the view that global economic growth is not slowing as much as people think."

He says the market tries to anticipate events six months in advance. "It's saying that looking into 2008, the earnings and economic growth will be substantially better."

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