The Dow Jones industrial average broke records on March 5 and that has more seasoned investors — like Tanya Johnson, vice president of BetterInvesting’s Channel Islands Chapter, in California — raising their eyebrows.
“I need to know what’s driving it and what’s driving prices up,” Johnson told the Ventura County Star. “I want to enter into a reasonably priced market.”
“Johnson plans to go into her portfolio and see if she’s made 30 percent on her money. She uses BetterInvesting tools to analyze her stocks,” the newspaper reports.
Johnson says this type of situation sometimes causes her to sell holdings.
Some investors are recalling a 2004 quote from Warren Buffett: “Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful.”
Johnson says she’ll be cautious, but not avoid risk.
“She recently doubled her investment when she sold a well-known technology stock that she purchased in 2008,” the article says.
“I wanted to take my gains and invest elsewhere,” she said. “I was worried it was going to top out.”
Is this excitement here to stay? For an interesting piece about the Dow rally, see PBS NewsHour. Guests included Barry Ritholtz, a market strategist, author and CEO of Fusion IQ, an online research firm. He also blogs at The Big Picture.
“Typically, when we see a market crash like in ’08-’09, the average snapback is about 70 percent. And here we are. We’re 136 percent. So this has gone a good long way, and that’s where a lot of the credit or blame has to be given to the Fed,” Ritholtz says.
“The question that I think a lot of people are thinking about longer term is when the Fed finally begins to remove this accommodation, what might that do for stocks? And the expectation is, unless it’s a really robust economy, once the Fed starts throttling back, it might become a little tougher sledding for equities.
“But in the meantime, it’s a pretty positive development to set new highs.”
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BetterInvesting is a national nonprofit organization that has been empowering individual investors since 1951. Founded in Detroit, the association (formerly known as National Association of Investors Corporation) was born out of the conviction that anyone can become a successful long-term investor by following commonsense investing practices. BetterInvesting has helped more than 5 million people become better, more informed investors by providing webinars, in-person events, easy-to-use online tools for analyzing stocks and mutual funds, a monthly magazine and a community of volunteers and like-minded investors. For more information about BetterInvesting, visit its website at http://www.betterinvesting.org/investing/landing/openhouse/blog/index.html or call toll free (877) 275-6242.
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