Stocks made money, but who said it was easy?

AMONG the many strange things you hear in stock market chatter, one of the strangest is "The easy money has been made."

A search of Google News turned up the phrase 10 times since late January, in financial commentaries from Singapore to South Africa.

Glancing at a stock chart, you can see what these people are driving at. In the 12 months since mid-March 2003, the Standard & Poor's 500 Index has jumped 42 percent and the Nasdaq Composite Index 56 percent.

If history is any guide, this sort of performance isn't likely to repeat in the next 12 months.

It's one thing to say the gains were unusually large, and quite another to say they came easy. The first statement is true, the second demonstrably false.

"Now they're screaming that all the easy money has been made, so stay away from stocks," writes Jeff Stambovsky, senior vice president at Miller Tabak Roberts Securities LLC, in an e-mail response to a recent column of mine. "If it was so easy, why didn't they know it then?"

If the savants did know, they didn't say so. Twelve months ago, analysts everywhere had a long list of reasons why stocks were dangerous, or at least not ready to recover from a three-year bear market.

Investor optimism, as measured in a Gallup Organization survey, had just sunk to its lowest point since October 1996. "Consumer confidence in U.S. declines to nine-year low amid Iraq war concern," said a typical headline of the time.

Figures on activity by mutual fund investors in early 2003 showed an outflow in January, normally a busy month for buying, for the first time since 1990.

So no, there was nothing easy about stepping up and buying stocks last year at this time. It would be six months later before the economic data began to confirm with any consistency that business activity was accelerating.

By that time, stocks were already up a lot, and analysts had launched into warnings that the market had come too far too fast.

As in any business, trade talk in the stock market is full of innocent patter, phrases like "profit-taking" and "bargain-hunting." My big objection to "The easy money has been made" is the fundamental misimpression it conveys. It implies that there are recognizable times when it is good to buy stocks, and other times when wise people know to stay away.

Hearing this, ordinary citizens conclude that since they lack that inside knowledge they are better off avoiding the whole business.

Perhaps some of them should stay away--but not for that reason. Stock prices, like any other market-determined prices, almost always sit at the threshold of pain from a buyer's point of view (from a seller's, too, but that's another story).

If the market has fallen lately, it's because of nasty developments that could depress prices more. If it has risen lately, well, it has already discounted all the good things that might happen and is vulnerable to disappointments.

At any given time, there is always a good excuse to shy away from owning stocks. Give us a break, investment mavens. Stop talking about "the easy money" unless you can say something about it 'ahead of time.

Chet Currier is a columnist with Bloomberg News.