Market is quietly bullish

NEW YORK – Any investors who read their January financial statements might be feeling a little too shell-shocked to go back into the market. Put your trepidation aside, professional investors say, because there are plenty of reasons to be buying.

While stocks have recovered somewhat from their poor performance last month, the Standard & Poor’s 500 remains stubbornly negative for the year, leaving investors with little motivation to buy. And while money is making its way back into stocks, the lack of enthusiasm for equities is palpable.

Amid the gloom that’s hanging over the market, however, a quiet bullishness prevails among professional investors, who point to a robust economy, relatively low interest rates, tame inflation, strong corporate profits and positive earnings growth.

In a quarterly letter sent to shareholders earlier this month, Bill Miller, portfolio manager of the highly regarded Legg Mason Value Trust (LMVTX) said he’s quite optimistic about 2005. After a 29 percent increase in the S&P 500 in 2003 and an almost 11 percent increase in 2004, companies are still setting records in terms of profits, cash flow, returns on equity and levels of cash as a percentage of assets, Miller said, yet skepticism reigns.