AP: 6c10ee82-b238-47f0-9bd8-0d67b466e990
A stock trader works at the New York Stock Exchange as a television screen carries financial news, Tuesday, March 5, 2013, in New York. The Dow Jones industrial average jumped nearly 100 points early Tuesday, reaching an all-time high, powered by China's strong economic growth targets and a jump in European retail sales. (AP Photo/Mark Lennihan)

Watching the Dow: 'A little fear is healthy right now'

BY Alyssa Kleven  on March 5, 2013 @ 12:25 pm (Updated: 2:27 pm - 3/5/13 )

The Dow Jones industrial average surged past its record high and kept going on Tuesday. It jumped from the opening bell, climbed as much as 158 points early and reached 14,286, breaking through its previous record high set in October 2007.

Thank your friends at the Federal Reserve, CBS Moneywatch's Jill Schlesinger told Seattle's Morning News.

With low interest rates, large investors with very little choice among all the different assets to buy, are finding that stocks are probably their best bet.

"The trader in me says not to fight the trend," said Schlesinger. "But the other part of me says, if you haven't looked at your 401K or IRA in a long time - now might be an awesome time to re-balance."

The warning signs she said, lay with the Fed. They're going to keep interest rates low, but only until the employment picture is better. What they have defined as "better" is still a ways off.

"That's going to help stocks," she said of the short term.

Once the employment rate reaches the desired amount, and the Fed reverses course and raises interest rates, that's when she believes stocks will start to trend down again. "I think a little dose of fear wouldn't hurt you right now," she cautioned.

Overall, Schlesinger said there are a number of reasons to be optimistic. Our economy is looking healthier, and Schlesinger pointed out we're not losing jobs every month.

But employment will continue to be an issue, she said. While 12 million people are out of work now, "Hundreds of thousands more will lose their job because of [sequestration] cuts."

Ultimately, Schlesinger said if you want to stay ahead of the game, balance remains the key. "The people who said 'a little stock, a little bond, a little cash' have done better over the last decade."

The Associated Press contributed to this report.

Alyssa Kleven, MyNorthwest.com Editor
Alyssa Kleven is an editor and content producer at MyNorthwest.com. She enjoys doting over her adorable dachshund Winnie - named for Arcade Fire front-man Win Butler.
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Comments (12)


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  • Mavila wrote...
    The fundamentals of this are...
    March 5, 2013 2:13 pm
    suspect.

    Be careful about the advice to restructure your investments. The economy is not "healthier" unless you're comparing it to 2008-2009. It's only marginally healthier compared to that time frame which was disastrous.

    Economically, it's been a holding pattern for a couple of years now with unemployment still quite high and GDP growth anemic at best. The 4th quarter 2012 number was flat.

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  • The Real Me wrote...
    Sequester!
    March 5, 2013 2:30 pm
    the dows direction is being led by a few macro factors... one is the feds easy money policy.. second our fed is cornering the bond market, to force down interest rates... third we are printing dollars to buy our bonds, thus we are devaluing our currency... the DOW is just acting accordingly to what should happen when you ruin bond yields, for long term investments thus forcing more people to use equities as a larger part of a portfoleo as inflation resistant hedges..... you devalue the currency in which the dow is priced, and then you pump up with people your trying to convince everything is good... the dow could go to 20000 in the next 4 years if obama and the fed keep stimulating the banks, printing money, cornering the bond market... you will see money keep going into the dow, cause it has nowhere else to go... and as you see inflation, food prices increasing, gas going -up more, if obama continues his reckless policies... TIGHT MONEY IS . INEVITABLE if we keep treating our money like garbage but the companies CAN RAISE THEIR PRICES.. thus these major companies can resist alot of the effects of a devaluing dollar by laying them off on you... the consumer, and stock prices will look good cuase of GREATER PROFITS, but no one will leave the next great depression unscathed
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  • It's me! Ha ha! wrote...
    Don't worry.
    March 5, 2013 2:39 pm
    It will bottom back out tomorrow or the next day.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • messiah101 wrote...
    Imagine the Dow hits a New Record and
    March 5, 2013 2:44 pm
    A Socialist/Communist is running the country.The Right may hate Obama but Business sure appears to LOVE him
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Mavila wrote...
    messiah101...
    March 5, 2013 3:15 pm
    You fail to recognize that this DOW "record high" is based upon shaky economics. The fundamentals of this economy don't support it.

    As others have noted, QE money is going into the stock market because there's nowhere else to go. It's driving the price up.

    The other thing to keep in mind with respect to your partisan take on the emotional attachment to a record high is that you have not factored in inflation which has been admittedly low but not non-existent. The inflation adjusted high is closer to 16K plus (probably more than 17K, but I'm too lazy to do the math).

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  • messiah101 wrote...
    Mavila
    March 5, 2013 6:50 pm
    As I have said several times the market is vastly outpacing the inflation rate.You remind me of someone who bet on a horse race and your horse won paid 50-1 set a new track record and your up set because he had the wind at his back
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  • 509 wrote...
    The elites LOVE Obama.....he protected them from the people and their pitchforks!!
    March 5, 2013 4:41 pm
    It is not conservative versus liberal....it is the elite versus America. The politics are just a diversion. Bush/Obama rolls on!!!!
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • maplefish wrote...
    M101
    March 5, 2013 6:07 pm
    The Rich get Richer and the poor stay poor under YOUR incompetent pathetic excuse of a Leader, Barak Hussian Obama . Apparently you don't seem to grasp the irony....HAHAHAhA. I just might by a new Porsche.
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  • messiah101 wrote...
    Fish
    March 5, 2013 6:46 pm
    All I know Fish is since 01/01/2012 till 03/04/2013 my 401 has increased 23% and I'm certainly not a rich guy.Obama has been very very good for the market and you can spin it anyway you care to but todays figures do not lie.Inflation sure we have it but it is in no way close to the market gains.You guys are so hateful towards Obama it kills you to give him credit for anything.Your a Sad sad group
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  • rational wrote...
    messiah101
    March 5, 2013 8:03 pm
    .You guys are so hateful towards Obama it kills you to give him credit for anything.

    I'll credit Obama for pumping up the market...will you hold him responsible when the bubble bursts?

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  • Rangerhawk wrote...
    Will be historically referred to as "The Sequester Bump"
    March 5, 2013 6:19 pm
    When the economic prospect Hope & Change government spending was to be cut back. As no gravy is spilling over to Main Street, look for the purveyors of OWS to counter in an ugly self-cannibalizing orgy!
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  • rational wrote...
    Hundreds of thousands more will lose their job because of [sequestration] cuts."
    March 5, 2013 8:02 pm
    That is if Obama has his way. His admin has already been caught warning an agency to make sure their dire warnings come true. Obama wants to harm as many Americans as he can so he can prove his claims true.
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