- NEW YORK (Reuters) - The
current bear market in stocks is already the longest in 60 years, and with
few investors willing to step up and buy, the likelihood is it will go
a little longer, market analysts say, Worse news for some investors, the
Standard & Poor's 500 index <http://www.reuters.com/quote.jhtml?ticker=.GSPC&qtype=sym&qcat=news>.GSPC
is flirting with its most recent low, which makes it perilously close to
making this the deepest bear market since 1938. "It's not fundamentals
causing this, but an overdose of uncertainty with" the Iraq situation,
said Anthony Chan, chief economist at Banc One Advisors which oversees
$150 billion in assets.
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- With the Bush White House reviewing military options
against Iraq, investors are on tenterhooks as to the timing of any action
against the regime of Saddam Hussein. Any war could be costly and derail
the U.S. economic recovery as oil prices rise and resources are diverted
toward defeating Iraq.
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- Most investors do say that things are going to get worse
before they get better. Irrespective of any U.S. campaign against Iraq,
concerns about both the quantity and quality of earnings are another drag
on the market.
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- Low stock prices "are a reflection of how negative
people have become," said Lester Rich, a portfolio manager with StoneRidge
Investment Partners LLC. Base in Malvern, Pa, $600 million in assets. "Corporate
governance issues are still hanging over the market, and its difficult
not to pick up a newspaper and read an Enron story" a year after the
problems first became apparent. The energy company filed the largest bankruptcy
filing to date in December, having failed as its stock plummeted amid investor
unease over its opaque accounting and murky "off-balance sheet"
transactions. It was the first of string of companies to announce accounting
problems, prompting investors to question the accuracy of results and a
backlash which finally saw company executives attest to their corporater
and then get an oversold rally."
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- Also remaining optimistic despite the doom and gloom
pervading the majority of shareholders, Chan said investors should be looking
at the low prices on stocks as opportunities to buy given the long-term
outlook for the economy and company profits are improving. Though he admitted
that "investors are getting tired of the 'opportunity story'."
But with little good news coming through, and more risk than reward on
the horizon, investors are merely hoping that the bottom is close, if it's
not already in.
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