As Wall Street closes the books on the first half of 2013, it’s worth noting that six months ago virtually no one predicted that the major market averages would have their best start to a new year since 1999.
But that is exactly what happened. Year-to-date, the Dow Jones industrial average is up around 14 percent, defying gravity.
So what can investors learn from the six months just past? Here’s a midpoint review of the surprises that have kept investors on their toes in 2013:
* US stocks defy presidential election cycle slump: Typically, the first year of a first or second presidential term is an anemic one for stocks. The Dow went up an average of about 5 percent in such years, going back to 1949.
* The sequester didn’t matter: Washington-speak for cutting $85 billion from the federal budget this year didn’t result in any of the Beltway bedlam that had been predicted.
Not only didn’t planes fall from the sky, the economy continued on its moderate-growth path, and the Dow has risen nearly 1,000 points.
* European markets didn’t fall out of bed: Despite dire projections and real, intractable problems in the European Union — not to mention a recession in most EU countries — the euro and the European markets have held their own so far in 2013.
Germany’s DAX is up nearly 5 percent, while even recessionary France has managed to gain 3 percent.
* Big bank CEOs survived: The “survivors club” — that small, elite group of banking honchos who came through the Great Recession with their names still on the corner office doors — cemented their positions in the first half of 2013. JPMorgan Chairman and CEO Jamie Dimon easily survived a proxy fight, while Goldman Sachs’ Lloyd Blankfein is comfortably in command. The vilification of bankers has seemingly come to an end.
As we wrap up the first six months, investors are flocking from bond funds, taking $61 billion out between June 1 and 24 — far surpassing the old record for a month.
That money likely will now shift into stocks, buoying the markets in the process. But given all the surprises this year has already produced, perhaps it would be wise to take a summer vacation and enjoy all those gains.