Will Stocks Continue to Spike Higher? [AUDIO]
As the economy slowly continues to improve, the stock market keeps shooting higher and higher this year, up about 17 percent since the beginning of January.
Many New Jersey investors are wondering if the rally will continue, whether now is a good time to start buying stocks, and why this is happening.
“Over the past two years, private sector job growth has averaged about 2.3 million jobs per year, payroll employment growth has been better than expected, consumer confidence is up, it looks like the housing market has bottomed out and has finally turned and prices are increasing,” said Rutgers economist James Hughes.
He points out another key factor is there are few alternative investments available to people these days, because interest rates are so low it’s difficult to get any kind of a return, so many are willing to put money into stock, hoping to make a profit.
But is this a smart thing to do?
“Sometimes economic fundamentals are divorced from the direction of the stock market,” said Hughes, “and economic trees can’t grow to the sky – at some point their height is going to be limited – the stock market is not immune to gravity – the old phrase was gravity is not only a good idea, it’s the law, and so things eventually fall down to earth.”
And what if you haven’t been in the market for a bit? “It’s probably very risky now to jump in right now – we do have risks going forward – basically Washington has the capacity to mess things up at any time,” said Hughes.