January Heat Wave Thaws Out a Cold Market
The dead have risen on Wall Street, and that has spooked some investors.</br></br>The first month of the year has seen a stunning snapback in nearly every type of risky investment, the very stocks and bonds that investors thought they had slain last year.</br></br>Now investors are torn: Is this just a hugely exaggerated January Effect, a tax-related new-year rise in stocks that will disappear as the calendar turns, or are small technology stocks, junk bonds and emerging-markets securities going to keep rolling through the year? No matter which camp they fall in, many money managers are terrified of being left behind.</br></br>"You can feel that panic to get invested and not miss out on a market that's taken off so strongly," says Kathleen Gaffney, a portfolio manager at Loomis Sayles who focuses on medium-quality and high-yield, or junk, bonds.</br></br>There is a lot to be afraid of. While the Standard & Poor's 500-Stock Index is up 2.6% this year, the Nasdaq Composite Index already has posted a double-digit increase, having jumped 12.6%. The Nasdaq's run looks pretty lame compared with really risky plays, such as the Dow Jones Internet Commerce index, which has soared 34.3%.