You’ve probably heard by now, the market has reached a new high. This sort of slid under my radar a couple of days ago when it happened, but then I’ve not been terribly surprised by this particular record. One of the reasons why is that it took over 5 years to get back to the place we were in the spring of 2007, five years that included a market selloff and recession of historical note. That’s a lot of time to watch the progression of things.
And we’re finally back to the point we were, at least in terms of the Dow.
But let’s remember that stock prices are an expression, on average, of corporate profits along with the expectation for growth of the same. Corporate profits are substantially higher that they were back in 2007. In fact last year we had regular occurrences of record breaking corporate profits. But it’s taken the market a year or a little better to catch up with the increase in profits for a variety of reasons.
Don’t get us wrong, we’ve been delighted to see the market advance. But we’re also very cognizant of the reasons for that advance and realize that this particular record isn’t all that important.
We’re also not particularly concerned about reaching this new high. Markets pretty regularly reach new highs because our overall economy continues to grow. That’s the natural order of things even though the natural progression can get sidetracked pretty dramatically from time to time.
We find ourselves in a growing economy. Housing and manufacturing continue to grow, unemployment is getting a little scarcer. Corporate profits have an excellent opportunity to continue their advance. And we look for the future to bring us new “records” as we go along. Of course it won’t all be in a straight line. Markets will sell off from time to time based on the vagaries of human nature.
In the meantime enjoy the new record and congratulate yourself for staying the course.