Callan Associates Inc.'s first-quarter market review reads a bit like a fairy tale.
"Inspired by dreams of an earnings resurgence in 1999, faithful investors chased this Peter Pan (meaning large-capitalization stocks) further into the land of fantastic stock valuations during the first quarter," executives of Callan, San Francisco, reported.
The Callan Broad Market Index of the top 2,000 stocks drew most of its strength from the large-cap sector, gaining 4.08% during the period ended March 31. The Callan Small Cap index fell 3.36%; it holds the bottom 1,500 stocks of the Broad Market index.
"Although the Fed often plays Tinker Bell sprinkling the magical dust of lower rates to help markets fly, the economy's unexpected strength during the quarter left the Fed sitting on its hands," the review said.
With unemployment dipping nearly to 1970 levels, oil prices rising and the Asian economies improving, "investors worried that the Captain Hook of inflation would soon appear."