For the first time since 2007, the Dow Jones Industrial Average has closed above the 14,000 range. This range puts the Dow near its all time high of 14,165. You know you're getting old when you remember where you were...when something happened years ago. I remembered the last time we where at these levels and here was the brief post I wrote about it:
Well I took the market for granted the last time it reached these levels but this time I understand how long its been and the gravity of what it means.
Are You Late For the Party??
My initial thoughts are yes! I get a little nervous when people that don't normally bring up the stock market in normal conversations start to talk about their portfolios and the need to get in before they miss out. That usually means its already too late. My goal is to attempt to check my emotions to the side and I usually like to buy the markets when things have gotten pretty bad. Its not very easy to do and sometimes you have to stomach all the critics and naysayers that say the end will never come. I bought my first condo in 2010 and the housing market in the Midwest had been plummeting for the last few years but I did my research and truly believed a bottom was very near and the decline, which was needed, was near the end of running its course. If you buy then (buying @ discount) you enjoy out sized gains in the future. I navigated the markets as well as an amateur investor could have done at the time (took my share of lumps) but and pulled a significant amount of funds into safer investments. After 2008-9 when we were calling for the world to come to an end, we needed some confidence to help reiterate when to get back in. I was very hesitant to increasing my exposure to stocks but listening to one investor in late 2010 gave many firmer ground to wade back into the markets. So think about that question in the future as you continue to invest thoughtfully during periods where its bleak or really booming.
Help In Getting the Timing Right
I love when investors lay their points out very quickly and in 2010 the simple points of David Tepper, a billionaire hedge fund investor, allowed many to understand why we should be in the markets. If you haven't listened to the points laid out by David, you can find the video and excerpts from that discussion here:
This simple excerpt from David Tepper's discussion makes it clear (from CNBC):
"Either the economy is going to get better by itself in the next three months...What assets are going to do well? Stocks are going to do well, bonds won't do so well, gold won't do as well," he said. "Or the economy is not going to pick up in the next three months and the Fed is going to come in with QE.
"Then what's going to do well? Everything, in the near term (though) not bonds...So let's see what I got—I got two different situations: One, the economy gets better by itself, stocks are better, bonds are worse, gold is probably worse. The other situation is the fed comes in with money."
I'll conclude with my thoughts that you may be a little late to the party because David laid out the case that (1) the economy will improve and stocks do well or (2) things won't go well and the Fed will inject money (QE) making stocks do well. An indication that we should should have been in stocks enjoying the rally up until this point. However, my next few posts will share the views of both sides who argue that from here we go HIGHER...and those that definitely think the markets go LOWER.
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