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A Not-So-Bounteous Bull Market

July 12, 1985

NEW YORK (AP) _ What good is a bull market if hardly anybody seems to be having a good time?

That’s the question many Wall Streeters are asking as the stock market approaches the third anniversary of the start of one of its strongest and longest advances in modern memory.

When the Dow Jones average of 30 industrial stocks hit a new record high last week, it sported a gain of 72 percent from the low point it reached in early August 1982. Several other, broader measures of stock price trends also stood at new peaks.

Yet rather than holding celebrations and proclaiming the good fortune enjoyed by themselves and their customers, many people in the financial world were busy fretting about persistent budget and trade deficits, the possibility of a recession or revived inflation, and lagging corporate profits.

All in all, it appeared to be a textbook illustration of the old Wall Street precept that ″a bull market climbs a wall of worry.″

There was more to it than that, however. The mood of Wall Street - or at least the public mood - is set by its customers, who have faced plenty of frustrations lately.

For a couple of years now, money managers at investing institutions that play such a dominant role in the market have had trouble showing performance result The first year of the bull market, recalls Anthony Tabell at Delafield, Harvey, Tabell Inc., was a bounteous one. ″Such periods have a number of normal characteristics,″ he said.

″One such characteristic is above-average market breadth, which means, quite simply, not only that the averages are moving ahead spectacularly, but that most stocks are also doing so and that, more importantly, almost no stocks whatever are moving downward.″

After that first year, many volatile stocks that helped investment managers post strong showings at the outset leveled off or turned downward, cooling off institutional portfolios dramatically.

Most institutions still showed gains, on balance, for periods such as the first half of 1985 - gains probably big enough to satisfy the typical individual investor.

But professional money managers play the game by different rules than individuals do. They are engaged in a constant struggle not just to make money, but to make more money than their competitors and to produce results that exceed the showing of a benchmark like Standard & Poor’s composite index of 500 stocks.

If they lag behind their competitors, they face the likelihood of losing business, bull market or not. If they don’t beat the S&P 500, they are confronted with the problem of justifying the fees they charge, when a ″no- brain″ portfolio set up merely to match the index would produce results just as good or better.

Right now, the ideal cure for money managers’ blues would seem to be a return of individual investors in force. As Wall Street’s Argus Research Corp. notes, steady, enthusiastic buying by individuals, ″while small in terms of day-to-day volume, tends to give lasting support to broad-based price moves in the stock market.″

That kind of groundswell is not in evidence at the moment, however. And neither is the old-fashioned enthusiasm that used to accompany a bull market.

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