Morici: Where to Invest Your Money in an Aging Bull Market

NEW YORK (TheStreet) -- The bull market just marked its fifth anniversary -- middle-aged by historical standards and not dead yet.

Money managers have valid concerns about the market, but those should be measured against changes in the national and global economies.

Since the financial crisis, the Federal Reserve has pumped $3 trillion into banks and bond markets, pushing down interest rates and making stocks attractive.

As the Fed winds down this policy, interest rates may not rise nearly as much as predicted, further sustaining stocks. For one thing, U.S. banks have consolidated, reducing competition for savers, and CD rates are not likely to return to pre-crisis level. And foreign investors fleeing turmoil abroad are seeking safe haven in U.S. bonds and real estate.

Individual investors took flight from stocks during the financial crisis and continued pulling money out through 2012.

Most folks can't finance retirements on permanently lower CD and bond rates, and will move back into stocks, giving prices a further boost.

The average price of stocks in the Standard & Poor's 500 Index is about 16 times last year's earnings -- a bit frothy. And corporate profits have been juiced by cost cutting as opposed to strong revenue growth in a slowly expanding U.S. economy.

It's hard to see how profits on domestic sales can be pushed up a lot with nominal gross domestic product growing at 5% a year. Nominal GDP refers to a figure that hasn't been adjusted for inflation.

U.S. companies earn about half their profits abroad, and while Asian growth is slowing, Europe is on the rebound. Overall, global growth should pick up in 2014.

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