Woke up today to a flurry of buzzes and beeps being emitted from my cellphone on my nightstand. Figured it was probably my girlfriend who is staying at her grandparents until I can get there on Christmas day. Boy was I shocked when I saw the 7 different CNBC notifications and the 2 yahoo finance ones as well. First thing that caught my eye was that U.S GDP growth outstripped expectations in the 3rd Quarter of 2014 and actually increased at a 5% rate! It definitely was a shock to me and a great thing to see. Finally, it appears as if our economy maybe getting back on track. Of course, if you look at the stock market you would ask hasn’t the economy been fine for months? Well, the economy is a lot more than just the Dow Jones Industrial Average, but it is always nice to see the Dow posting new all-time highs every other day.
Today was no exception as the Dow reached new heights of 18,000! Quite the turn around from the recession years where the Dow was sub 10,000. This is great news, showing that investors are more confident in our economy and the direction it is taking. For those who are savvy investors, hopefully their investments have been growing steadily and they will consider the direction the market may take from here.
While I love to be an optimist and say that I feel everything is only going to improve, I also realize that with new heights comes new worries. Every bit of new news that hits Wall Street is going to be carefully screened and over analyzed as pessimists await a market correction that they assume will bring the Dow back down out of the stratosphere. So, no matter whether our markets improve or decline in the coming months, fear of another crash is going to keep the market volatile. But, don’t view this as a negative!
Volatility in the market may not be good for anyone looking to retire soon, but for those of us who are in our late teens to early 30s, this is great news for us! While I don’t believe anyone can time the market perfectly, volatility in the market makes it easier to accidentally time the market! As I recommend in my article Automating your Financial Future and Security (Pay Yourself First!), make your contributions to your investments on schedule automatically and perhaps you will catch it on a down and wait for it to grow! Of course, I don’t recommend getting in and out of the market often, so avoid short term trading, but be aware of where your investments stand on average and hope you catch them just below that level.
Anyway, whether or not you are able to benefit from this spike in the market, it is still amazing to see the Dow so high and it will be interesting to see where it will go from here. What are your predictions for the market? Do you see it continuing to set all-time highs or settling down at a lower range such as 15-16,000? Let me know below in the comments!
Young Adults and Finance 2 