prudentinvestor

Why the Dow Is Headed to 6000

Everything you wrote makes sense, which is why the wise should be cashing out their gains, slowly but steadily. Slowly, because illogical as it may be, the market stil appears to be mandering higher, and steadily because stocks are quite overpriced for the current and forseeable economic environment.

Millions of retiring baby boomers are upset and may vote for change if their portfolios and retirement plans don't rebound. Thus, propping up the market until the next generation acquires the retiring boomers toxic financial assets may be perceived as sound public policy, and concerns have been voiced that the market is being manipulated, as in "We'll give you billions of taxpayers' money and y'all make sure the market goes up". This argues against shorting, and for taking any profits slowly, as the next big drop may be a long time coming. On the other hand, if and when it comes, it is likely to be like a bursting dam.

These are challenging times for any rational long-term investor.