It has been a long time since we have had any significant pullback in the stock market. In fact, the last down turn of any significance ended in mid November 2012 so it has been a good 4+ months of steady gains since then. The Dow seems to challenge all time highs on a regular basis now.
But the stock market keeps going up. What gives?
It is called the Wall of Worry and boy are investors ever climbing it with zeal.
One thing you need to understand as a beginning investor is that stocks and the stock market in general do not always follow a logical path. This is one of those times.
The stock market mostly moves on people's perceptions, feelings, emotions, and greed. Take a look at Apples stock as an example: it went up and up and up all the way to $700 over a period of years and then suddenly, overnight it seemed, investors decided they no longer wanted anything to do with the stock. There wasn't any real change in anything that started the reversal, at least not right away.
I'm scared right now that the stock market is too high and I don't understand why it keeps going up. That is the wall of worry. Why do investors keep putting more money into the market when things seem so bad? Its not like our politicians are doing or going to do anything to make the economy better.
This seems like a situation where a small spark, any small spark, can light a fire and burn away a couple thousand points on the Dow. It seems like a tipping point where some seemingly innocuous bit of bad news may start an avalanche of sellers. And once the selling ball starts rolling, people will be clamoring for the exits in an effort to protect as much of their gains as possible.
I hope I am wrong and if I am, I'm missing out on a good market and some nice gains. But my senses tell me that caution is a good thing right now so I am not putting any more money in at this time.