If you take a look at the DJI right now on 4/3/10, you will see it is just shy of 11,000. That is a long way up from just a year ago when it hit it’s bottom of around 6,500. Anyone who has bought stocks in 2009 and so far in 2010 has probably done pretty well.
It seems that many people have forgotten how bad things got just a little over a year ago and maybe the market has come up too fast. Any new investor looking into buying stocks for the first time probably doesn’t remember the daily punishment people took in their 401k’s and other stock invesments and just how much people lost. Many older investors are still reeling from the big decline and haven’t come close to regaining what they had.
People log onto the Internet every day trying to find the best stocks to buy right now. They might not take into account the overall health of the market and the current state of the economy. Afterall, in a big down market, even a hot stock may not go up. With all the political turmoil, jobs uncertainty, and companies under tremendous pressure to just stay in business, it is hard to imagine how the market can continue to rise.
One of the factors that helps the stock market is the fact that interest rates are so low. If you have money and want to get some sort of a decent return, you can’t put it in a bank certificate of deposit or in Treasury bills because they are paying next to nothing. Putting your money in stocks is about the only place you have that may give you some sort of a return. However, if the economy doesn’t start to turn around, investors may regret putting new money in stocks at this time.
