Wednesday, March 6, 2013

New Highs For the Dow. Where to go?

Today saw the Dow Jones Industrial Average Index of the top thirty companies in the US clase at an all time high of 14,296.

This is the second time the Dow has created new highs this week and the S&P is close behind pushing close to its old high made in September 2007.

So are we in for another crash or is this the start of a massive Bull run.

Probably neither. The massive Bull run is an ongoing phenomenon. It has been running for almost four years now. Since those dark gloomy days of March 2009 we have seen one of the fastest recoveries in any stock market, some 48 months from the low to match the previous highs of the prre crash market.

One sobering thought however is that this new highest ever high comes  less than a week after the US Government failed to act on the predicted disaster of sequestration. That policy of get nothing done was claimed by the Democrats to send the US and World economies into an immediate crash dive. Instead the markets hardly blink.

The whole deal will probably turn out only to be a propaganda disaster for the Democrats who see the world full of hungry wolves at every turn. They cry warnings of impending catastrophe and then settle back to let the dust settle.

This time though the markets and business have called the politicians bluff. The markets did not crash on a whisper or even a shout.  The markets merely showed their boredom at political fuss and feathers and just went on their own merry way.

Should we buy in a high market?

Of course. Stock picking is the watch word. A high market does not mean there are no bargains to be found so stay on the hunt for good stocks which offer good management, good income streams and good prospects for growth and dividends.

High value markets just mean you need to be careful. Sequestration will hit several sectors such as defense and large construction projects. Damn we really do need a better railroad system  and roads here in the US but guess we'll have to stick with a slow train to nowhere and the pot holes for another half century or so.


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