On August 2nd the Dow reached 22,000; the highest level on record for that stock market index. That's quite a run since its low point in March 2009 of 7,063. That's an increase of 211%!
The recovery was initially ignited by the government's rescue measures, as well as low interest rates. The low interest rate environment made it more profitable for companies to borrow to fund growth projects and lowered their borrowing costs.
In addition, low yields on bonds caused some investors to seek higher returns through investing in the stock market.
Along with growing profits at companies, the US has seen its unemployment rate fall from 10.0% (October 2009) to 4.3% (July 2017).
Recent improvements in corporate profitability is, in part, the result of a weakening US dollar, which makes US goods less expensive for foreign buyers.
Along with this surge in the stock market since 2009, an investor must now consider current valuation levels and the future prospects for higher growth. We advise a cautious approach, as many areas of the market show high valuation levels relative to historical averages.
What should you do with your investment dollars - put them into high priced stocks or low-interest bonds? We suggest drawing upon a trusted financial planner to match your investment portfolio to your objectives and risk tolerance, helping you to navigate the current financial terrain - which right now is very rocky!
We invite you to schedule a free, complimentary consultation with one of our Certified Financial Planning professionals. Contact us today at 515-225-6000
(We are fee-only, meaning we do not charge commissions on the sales of products. Simply said, we only work for you.)
Unemployment data from the Bureau of Labor Statistics
Dow Jones historical data from Yahoo! Finance