A fine first half for Minnesota stocks

So far, so good.

Despite the recent market sell-off sparked by the Federal Reserve's plans to maybe throttle back on easy money, the first half of 2013 was a strong one for most of Minnesota's biggest public companies. Three out of four companies in the Bloomberg-Star Tribune 100 index saw their shares rise.

Biff Robillard, a partner in Deephaven-based Bannerstone Capital, said the recent jitters were caused by traders worried about the Fed removing the economy's "training wheels" too soon.

"We think the U.S. economy will make the transition successfully, but it is at best an educated guess," said Robillard, who has been generally bullish since the 2009 market bottom. He predicts more volatility and moments of profound doubt. "But in the end, equities [will climb] higher for the next several quarters. And for several years. Don't overthink it."

So, with July 4th fireworks on the way, it's time to celebrate increased consumer confidence, rising employment and fatter retirement accounts for those investors who stuck with their stock funds since 2008-09.

The Star Tribune 100 was up 16.4 percent, compared with 12.6 percent for the Standard & Poor's 500 index of America's largest public companies and 15.1 percent for the Russell 2000 index of small-cap companies.

The stock market indexes have more than doubled in value from their March 2009 lows, thanks to the Federal Reserve's monetary fire hose that has kept interest rates low and stocks appealing, as well as record profits from the Fortune 500 in recent years.

In the medical field, Cardiovascular Systems, St. Jude Medical and Medtronic are up 25 percent or more this year.

Over the past four years, the value-added manufacturers and product developers have been among the best companies to own. Since July 2009, that group, including Select Comfort, Arctic Cat, Stratasys, Polaris, Toro, Graco, Fastenal, MTS Systems and Tennant, have provided a total return to shareholders of 25 percent or more annually.

G&K Services, which leases and launders company uniforms, is up 30 percent annually since July 2009, as America slowly returned to work.

Meanwhile, Best Buy, Piper Jaffray, Supervalu and Digital River are among the 20 members of Bloomberg-Star Tribune 100 that have recorded negative returns since the 2009 market rebound.

Despite a still tepid economic recovery, two Washington-branded "fiscal cliffs," a debt ceiling and budget funding showdown that resulted in mandatory spending cuts and the January snapback in Social Security payroll taxes, the S&P 500 rose more than 15 percent between Jan. 1 and May 22, when it hit 1,687. It closed Friday at 1,606, still up 12.6 percent.

And investors still are not in love with this market. The strong rebound since 2009 fought through economic obstacles, doubt and naysayers, climbing the proverbial wall of worry. However, the consensus among market analysts seems to be that the S&P 500 will trade in a near-term range of 1,550 to 1,700 for the rest of the year.

Erica Bergsland, director of research and trading at Securian Financial's Advantus Capital Management, said slowing corporate earnings growth expected for the second quarter "aren't the numbers on which to base the next 15 percent run in the stock market.''

However, she added: "What could create that type of growth could be a 'great rotation' out of bonds into stocks. We haven't seen retail investors run to stocks yet. We may see rotation as people see losses in their bond portfolio, and they will see that in their June statements."

The average bond fund, thanks to the recent sharp uptick in interest rates, is down about 2.5 percent. When interest rates were falling for four years (part of the Federal Reserve's market-priming policy) bonds yielded stock-like returns of 5 to 7 percent annually. That's over.

"We said last December that stocks looked better than bonds,'' Bergsland said. "And you can say the same thing today."

"I recommend investors get prepared for 2014 when the stock market could again rise to significant new highs," he said. "I also expect the U.S. dollar to weaken in the second half and would advise investors to increase international stock investments — both developed market and emerging markets."