“The Standard & Poor’s 500 Index (SPX)’s record rally probably has another year to go as investors give up their pessimism and buy, according to Laszlo Birinyi, one of the first money managers to tell clients to buy before the bull market began.
“As long as you have this sort of hesitancy or reluctance instead of acceptance, the positive case is still very much intact,” Birinyi, president of Birinyi Associates Inc. in Westport,Connecticut, said in a March 26 phone interview. “Don’t go looking for the exit. Leave the door open for a good year, because that is the one possibility that I do not hear.”
The S&P 500 rose 0.4 percent to 1,569.19 yesterday, exceeding its previous record from October 2007 and recovering losses from the financial crisis that wiped more than $10 billion from U.S. market value. Even with the rally, share volume on all U.S. exchanges has declined for four straight years and, at less than 6.4 billion shares a day, is the lowest since at least 2008, according to data compiled by Bloomberg.
Birinyi advised clients to purchase shares before March 2009, when the S&P 500 reached a 12-year low. The U.S. equity benchmark is up 132 percent since then. While companies with earnings most-tied to the economy such as retailers, computer makers and banks have led the advance, makers of home products such as soap and drugmakers are up the most in 2013.
“It’s surprising to see that it’s not the deep cyclicals or the names that I would have expected in a really good market,” Birinyi said. “It just shows that people are comfortable with the market, and there’s a little bit more of a focus on stock picking than people realize.”
