28 Dec Happy 2015 Wall Street! Right?

If you are an investor or make your money from the market or Wall Street, there’s not much to be unhappy about as we close out 2014. The Dow Jones Industrial Average in the last year has gone from around 15,300 to about 18,100, up over 11%. The Russell 2000 is up almost 6%. Everyone’s 401(k)’s are enjoying these record highs. And why not? The economic news is strong, GDP up over 5% in the last quarter, gas prices plunging, Obamacare apparently helping many and not yet destroying our healthcare system, interest rates remain rock bottom, unemployment below 6%. But the labor participation rate is dangerously low, many still feel underemployed and housing has not really rebounded.

From a purely practical point of view, an economy booming on all cylinders has risk. That the inevitable cycle will turn and lead to recession as it overheats. So maybe not the most terrible thing that there’s lots of good news but still some troublesome sectors. It’s why the Fed hasn’t yet been looking to raise interest rates, which would result from a fear of an economy about to turn negative. So it does appear that signs are pointing to a strong 2015 both in the market and the economy, barring unexpected geopolitical events.

When I said something similar to a sage mentor many years ago about the next year looking good, he looked at me and said, “But how do you know?” The answer: I don’t and no one really does, or we’d all be a lot richer. I’m just a humble armchair observer and no analyst of the economy. But if I had to bet, and we basically all do if we depend on the Street for a living, I’m betting on the bull for 2015.