As Good As It Gets... Really?

Once again we have seen another record breaking week on Wall Street. The market has seemingly shrugged off the continued systemic, economic, political and military concerns which have not been resolved around the world. Interest rates remain at historic lows. Unemployment levels seem to be holding around 6 to 7%. Perhaps the U.S. markets are still the best place to invest. Perhaps a case can be made for the continued upside in the market. But, as Paul Harvey used to say, lets look at "the rest of the story."


Chart courtesy of www.chartoftheday.com

The above chart shows Standard & Poor earnings growth peaked several quarters ago. At that time earnings growth surpassed their highest recorded level since 2009, immediately before the Financial Crisis. Earnings growth has been declining since then. Can the market continue its parabolic rise at a time when earnings growth has been declining? Many so-called gurus think so. Or are portfolio managers trying to get into the market so they are not left behind?


Chart courtesy of www.realtimestockquote.com

The weekly ten year Dow chart seems to show there is still some upside potential. However, any further increase will create a steeper "rising wedge" formation which is a bearish sign. Some profit taking may actually be prudent at this time.

These are just a few points to keep in mind. There are definitely still opportunities to invest in this market. A well diversified portfolio remains the key to long term growth and wealth accumulation. And its not about how much you make in the market-- its about how much you keep.

Note: The above is for educational purposes only. You should speak with your own personal financial advisor regarding any decision to buy, sell, or hold specific assets in your portfolio.