CHICAGO (Reuters) – What are the odds that the U.S. stock market’s bull run will continue?
Despite last year’s record rise – the S&P 500 and Dow Jones industrial average both closed at all-time highs – it does not always follow that one good year will be succeeded by another. The stock market is often roiled by irrational fears, bubblicious greed and a constantly boiling pot of earnings reports.
Yet many pundits predict that corporate earnings and the global economy will continue to expand, so stocks may have another good year. Just don’t invest thinking you will see a repeat of the 26 percent return the S&P 500 Index posted last year.
A little historical perspective on 2013 may be in order. The most comparable year was 2003, when the S&P Index returned 26 percent. Going back further, you would have to revisit the nifty ’90s to see better returns: big stocks were up nearly 27 percent in 1998; 31 percent in 1997 and 34 percent in 1995.
What did those years have in common? Relatively low inflation and consistent economic and employment growth. If you see these trends continuing in 2014, odds are your portfolio will benefit.