Investor Interest in US Stocks Is Awakening

Tuesday, March 23, 2010

Last Friday I described the potential bull market that could come from investors showing an interest in US stocks. And I mentioned an article that indicated such a move could be starting.

Two more articles just came out, providing further support.

After focusing on bond interest, investors are looking at stock dividends, particularly with expected growth:

Dividends Take to the Comeback Trail (By Peter A. McKay, “Abreast of the Market”, The Wall Street Journal, March 22, page C-1)

“In the tumult of the past two years, dividends have been all but forgotten. Now they are starting to make a comeback.”

“Now that corporate profits are recovering, though, it is inevitable that investors will take a harder look at what companies are doing with their newfound riches, traders and analysts say. Shareholders are likely to demand at least some of the rising earnings be put directly into their hands.”

“After the massive rounds of cost-cutting by corporate America, many traders expect the market will enjoy solid ‘earnings leverage,’ or outsized benefits from any uptick in sales, which should go straight to the bottom line.”

After pouring money into bonds, investors are beginning to show an interest in switching to stocks:

Fuel for Stock Rally: Bond-Market Exodus (By Kelly Evans, “Ahead of the Tape”, The Wall Street Journal, March 22, page C-1)

“Now there are signs that investors are growing bolder.”

“A year ago, ‘we could have talked blue in the face about the once-in-a lifetime opportunities’ in stocks, but clients ‘wouldn’t even pick up the phone,’ says Gary Flam, equities portfolio manager at Bel Air Investment Advisors in Los Angeles. Now, Mr. Flam says, clients ‘are more open to it, they’re proactively contacting us asking if it’s time to get in.'”

“This in turn may create new momentum for stocks.”

These shifts are typical signs of a new trend forming.

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March 2010