The Dow Jones Industrial Average continues its relentless climb to record levels. Should we be worried? Here are a few factors to take into consideration.
- Employment is getting better. Hiring is not robust and many are still unemployed or underemployed, but the trend is modestly up.
- Retailers are feeling the pinch as take-home pay gets cut from the social security tax going back to the historical 6.2% rate.
- Home prices are stabilizing and are even reported to be increasing in some areas.
- The banks are making lots of money; borrowing at 0% and lending at 10% allows them to rebuild their balance sheets.
- Corporate profits are hitting record levels.
- Watch out for bonds. When the Fed allows rates to rise to more normal levels, bond prices will decline.
- Stocks are more attractive than bonds for many investors looking for income as dividends often exceed the yield on bonds. There will be fluctuation as economic and political roadbumps are hit; remain well diversified.