- The Washington Times - Friday, July 4, 2003

NEW YORK (AP) — The bull market is back, according to at least some definitions of the term.

The Standard & Poor’s 500 Index this past week posted its best quarterly gain since late 1998. Wall Street’s three main gauges are at their highest levels in a year. Investors are more upbeat that an economic rebound, three years in coming, is under way.

Still, the “bull market” label gives investors a false hope of sustainable gains, experts say.

“I’ve seen a concrete definition of a bear market as being down 20 percent, so for bull markets you could say it means rising 20 percent,” said Robert Shiller, a Yale economics professor and author of “Irrational Exuberance,” which predicted in 2000 the bursting of the tech bubble.

“But it’s often misleading to call something a ‘bull’ or a ‘bear’ market, because people think you’ve diagnosed something, when in fact all you’ve given it is a name,” he said. “What they think it means is that it’s going to continue.”

Indeed, some experts define a bull market as a 20 percent upward move over any time period, while others prefer to see the gain sustained over several months to a year. A small minority refuse to declare a bull market until stock gauges reach a new peak.

There are also “cyclical” bull markets, which run for about a year, compared with multiyear “secular” ones.

Many specialists say Wall Street’s current run can be best described as a cyclical bull market within a secular bear market, which began in 2000. Historically, secular markets last 10 to 15 years, according to Ned Davis Research in Venice, Fla., so stocks could well return to bearish declines in a year or two, if not sooner.

Stocks have gone through a cyclical bull market recently. Prices rose more than 20 percent from September 2001 to March 2002 after the September 11 attacks. A flurry of accounting scandals, however, soon derailed that rally and stocks fell to multiyear lows Oct. 9.

In the bull market run since Oct. 9, the Dow Jones Industrial Average is up 24 percent, the Nasdaq Composite Index is up 49 percent, and the S&P; is up 27 percent. (The gauges, meanwhile, remain far off their early 2000 peak, when the Dow hit 11,722.98 Jan. 14; the Nasdaq climbed to 5,048.62 March 10; and the S&P; rose to 1,527.46 March 24.)

Sam Burns, research analyst at Ned Davis, said some analysts question whether stocks are in a longer-term bull market because there is still a great deal of economic uncertainty.

Still, optimism is high. On Monday, the S&P; closed the second quarter with a 14.9 percent gain, the highest since 1998. The Dow and Nasdaq had their best quarter since late 2001, rising 12.4 percent and 21 percent, respectively.

“We are in a bull market,” said Joseph Keating, chief investment officer at AmSouth Asset Management. He said he expected 4 percent growth by year’s end because of low interest rates, the dividend tax cut, a decline in energy prices and corporate cost-cutting.

For the week, the Dow Jones industrials rose 81.16, or 0.9 percent. They closed Thursday at 9,070.21.

The Nasdaq Composite Index had a weekly advance of 38.20, or 2.4 percent, closing at 1,663.46 .

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