25 Reasons to Believe in the Market Rally


Positive news rarely gets fair representation in the modern media when fear, uncertainty, and doubt reel in audiences. And while it's good to research the bear side of arguments, as Fool colleague Sean Williams did in "50 Reasons I'm Not Sold on This Rally," we also should take a look at the positive side of things. After all, if you are a buy-and-hold investor, you'll want reasons to keep holding. Here are 25 reasons, sorted by topic.

1. The Monster (NYS: MWW) Employment Index, which measures online job vacancies, recorded 2% growth. This makes July its 29th month of positive growth over the prior year.

2. The Employment Index also reported that transportation and warehousing posts grew 11% over the prior year in July, on top of 22% in June. Both measurements typically accompany the early phase of a bull cycle.

3. The same index for Europe posted 2% growth as well, with Germany leading at 13% growth for job-posting activity.

4. While the unemployment rate at 8.3% is higher than the historical average of 5.8%, the employment-to-population ratio at 58.4% is higher than every year before 1977, going back to when it was first recorded in 1948.

5. Wages in the U.S. are expected to rise 3% for 2012 and 3.5% in 2013, according to the Organization for Economic Cooperation and Development, up from a low of 1.1% in 2009.

6. According to the Conference Board's Consumer Confidence Index, the percentage expecting more jobs in the coming months rose from a little less than 15% to 17.6%.

7. The overall Consumer Confidence Index increased to 65.9 for July, up from 62.7 in June.

8. Nonfarm payrolls recovered from a dismal June figure of adding 64,000 to adding 163,000 in July.

9. While the price of private colleges has increased more than 15% in the past five years, the net price that includes grants and scholarships (basically, what students actually pay) has decreased about 4%.

10. And while the price for public colleges has increased almost 28% in the past five years, the net price, again including grants and scholarships, has increased by a more reasonable 7%.

11. During election years with an incumbent on the ballot, the Dow Jones Industrial Average (INDEX: ^DJI) has historically risen 9%. Hopefully during this election year, the Dow follows a similar trajectory.

12. The Case-Shiller Home Price Index, which tracks the value of residential real estate, was at 123.3 after the first quarter of 2012. The historical average since 1890: 123.6. Housing may finally be stabilizing.

13. The number of foreclosures in the U.S. fell 10% in July over the previous year, making it the 22nd consecutive month of declines.

14. The number of delinquent mortgages in the U.S. is down 13% from a year prior.

15. Housing starts in June increased about 7% over May, and about 17% over last year.

World economy
16. U.S. exports grew $1.7 billion in June, despite expectations that slowdowns in Europe and China would curb overseas demand.

17. This June marked the lowest trade deficit for the U.S. in 18 months.

18. China's inflation rose just 1.8% in July, giving the government room to cut rates and use other stimulus without the threat of pushing the price of goods beyond acceptable limits.

19. Along with low inflation, China's central bank rate sits at 6%, giving it even more room to maneuver rates lower. For reference, during 2008 it lowered its rate to 5.3%.

20. Japan intends to pass a higher sales tax. According to Bloomberg, protesting housewives with pans and ladles stated that "99% of the public will have to cut back on what they buy." But the move could help the nation confront its staggeringly high debt and give more confidence to bond investors.

Company trends
21. For well-run businesses, there's growth to be had. Berkshire Hathaway's (NYS: BRK.B) Railroad, Utilities, and Energy segment increased revenue more than 4%, while its Manufacturing, Service, and Retailing segment grew revenue more than 14%. Both operating segments traditionally serve as leading economic indicators.

22. Poor trading practices might be getting their comeuppance. The controversial practice of high-frequency trading burned Knight Capital to the tune of $440 million and has led the company to put in safeguards against the errant computers that executed the trades. It also is pushing the SEC to work faster on programs that will "ensure the capacity and integrity" of exchanges, according to Bloomberg.

23. The social-media bubble is sorting out the actual businesses from hype. While Zynga (NAS: ZNGA) COO John Schappert resigned, his former employer, Electronic Arts, is suing the social-game company for ripping off its Sims franchise. Add in Amazon.com's move into social gaming with Amazon Game Studios and its first game, Living Classics, on Facebook, and it might be game over for Zynga. However, for a closer look at Zynga, one of our top tech analysts recently assessed the company's prospects in a brand-new premium report.

24. On the flipside, one social-media company with a more established business model is LinkedIn (NYS: LNKD) . The career-networking site, which actually charges for a service, reported that its largest business unit, Hiring Solutions, more than doubled in revenue compared with the year prior.

25. Finally, the Manchester United IPO signals that there is at least $100 million that investors don't care about throwing away.

If this list hasn't put your worries at ease, let others know why in the comments!

The article 25 Reasons to Believe in the Market Rally originally appeared on Fool.com.

Fool contributorDan Newmanholds shares of Berkshire Hathaway. He holds no position in any of the other above companies. Follow him on Twitter,@TMFHelloNewman. The Motley Fool owns shares of LinkedIn, Facebook, Berkshire Hathaway, and Amazon.com.Motley Fool newsletter serviceshave recommended buying shares of Facebook, LinkedIn, Berkshire Hathaway, and Amazon.com. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.

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