Friday, the Dow closed out at 14,000 for the first time since October 2007. The Dow closed up 149.21 points, almost reaching the all-time Dow high of 14,164.53. The biggest question on everyone’s minds at this point, is how high will the Dow go? Will it continue to climb and create a new high of 15,000? Or will it peak out and slowly descend to more “normal” numbers.
What Caused The Spike In The Dow?
Trying to discern whether or not the higher numbers are sustainable can often be determined by the reason it started climbing to begin with. One of the primary reasons behind the Dow’s rise is the optimism around the world that economies both here and abroad are showing signs of improvement.. If recovery appears sustainable, and investor confidence is restored, it will boost corporate profitability, which will in tune boost the markets.
The Dow Will Continue To Climb Because Other Investment Venues Are Not Producing
In a recent USA Today interview, Jeremy Siegel the finance professor at Wharton school of business discussed that he believes investors will have little choice but to turn towards the stock market because U.S. treasuries are yielding roughly 2% and cash yields are at 0%. He sees the Dow hitting 15,000 or higher by the end of 2013 and figures stocks will be up 20%.
The Dow Will Stagnate For Awhile Due To Other Economic Concerns
Others are less optimistic than Siegel and figure the Dow will not continue climbing straight up. Historically, 14000 has acted like a ceiling for the Dow. It’s a number that has proven insurmountable to get past. Thus, it’s difficult to say which direction the Dow might be headed. Other concerns that will possible impact the health of the stock market is the turbulence we are seeing politically in Europe. The UK has suggested a referendum that could threaten their position in the EU, and German elections are coming up. Here in the U.S. we have a government that is trying to adjust to higher taxes and less spending, which could stifle economic growth.
So what’s an investor to do? It’s difficult to ascertain whether or not the DOW will continue to rise or not, but one thing is certain…the stock market has offered greater profit than most other investments over the last several years. For more information on when and where to invest your hard earned assets, seek the advice of a Redhawk Financial Advisor near you. Redhawk advisors have many investment tools at their disposal and are well-equipped to point you towards a financial decision that’s well suited for your individual investment needs and for our ever changing economic climate.