by Jiang Hanlu, Liu Fan
NEW YORK, March 9 (Xinhua) -- Many investors would ask: "Did I just miss out on the stock rally?" Most investors have not had time to react before they realized the Dow had rallied on for six days in a row and repeatedly made record highs in the past four days.
The historical moment for Dow came a bit too fast and looked a bit unbelievable in the wake of the January rally.
Year to date, the Dow was up 9.9 percent, the S&P 500 up 8.8 percent and the Nasdaq up 7.4 percent. And the S&P is within 1 percent to its record high in October 2007. The consensus now is that the market will close at a better place by the end of this year.
As undecided investors, who have been sitting on the sidelines with their money at hand, are still wondering if they are too late for the "party" and if a correction is just around the corner, analysts and traders are also divided on Dow's next step in the near term.
BULLISH OR BEARISH?
According to CNBC's Street Poll, 52 percent of respondents predicted the market would go higher while 48 percent said lower.
Warren Buffett, the so-called "Oracle of Omaha" and boss of Berkshire Hathaway Inc., told the CNBC on Monday that his company is still buying stocks at a "good value" although stock prices were higher than four years ago. "You get more for your money" compared to other forms of investments, Buffett said.
Echoing Buffett's view, retiring chairman of Goldman Sachs Asset Management Jim O'Neil, best known for coining the term BRIC, told the same TV station on Friday that most of the leading emerging markets and peripheral Europe are cheap and that the U.S. market would not top as economic momentum is there.
Alan Valdes, director of floor trading at DME Securities, told Xinhua: "The market will continue to go higher. You could see a five-year bull run here, starting right now."
Valdes suggested investors should take opportunity of the rally, saying "if you sit on the sidelines, you are missing great opportunities. You are going to see pull-backs, but they are going to be buying opportunities."
U.S. companies are also faring better judged by the earnings reports in the fourth quarter of 2012. According to Thomson Reuters' latest data, fourth-quarter earnings for S&P 500 companies are projected to have risen 6 percent, above a 1.9-percent forecast at the beginning of the earnings season.
"The market was here in 2008 when the United States was built on house of cards. Five years later, the stock market is where it is and the foundation of all of corporate America is stronger than it has ever been," Jason A. Weisberg, senior trader at Seaport Securities, told Xinhua.
However, skeptics throw damp over such optimism, citing risks including the Fed's exit plan of its quantitative easing, the government's sequester, unemployment in Europe and Middle East threats to oil supplies.
Most of the fears are about the market's over-reliance on the Fed's massive asset-purchases plan. Many hedge fund managers held that, once the Fed started to taper and eventually stopped its easing policy, the stock market could tumble.
Nouriel Roubini, a New York-based economist who predicted the collapse of the U.S. housing market and the most recent global economic recession, on Friday projected that the U.S. economy will grow only 1.5 percent in 2013 due to consumption growth slowdown, the sequester and the fiscal drag, which will eventually deal a blow on the market.
The market is going to be surprised by how much the United States is going to slow down, even compared to last year, Roubini, widely known for his nicknames "Dr. Doom" and "permabear," said, adding that the U.S. market would correct in one way or another.
MARKET MIGHT BE HIGHER BY YEAR-END, CAUTION ADVISED
Anyway, most traders share the view that the market will go higher by the end of this year, whether it will go straight up or rally along with minor corrections.
"I believe there is still a lot of money on the sidelines and, with this rally gaining more credibility, you will see a further rotation into stock and ETF funds," said Gregory J. Keating, managing director at James E. Coffey Securities Inc.
As long as the Fed keeps stimulating, the music is playing and the market has got to dance, commented Kenneth Polcari, director of NYSE Floor Operations at O'Neil Securities.
"The Dow will reach 15,000 and higher by the end of this year. One-hundred percent! Guarantee!" Weisberg of Seaport Securities said. He also predicted the S&P 500 to rise to around 1,580.
However, for investors late to the party, it is advisable that they stay very nimble unless economic or geopolitical surprises pop up.