The Dow Jones Industrials and the S&P 500 are back trading at all-time high price levels again. Stock market investors should be very happy that the summer of 2013 has not included any investment pain and angst.
But like the Minnesota summer, the current stock market advance will not last forever.
At every last great stock market top, all that you read and heard was that interest rates were going to stay low and that the stock market was going higher.
Investment management is a game best played by thinking one step ahead of what is taking place now. It is too late for you to sell the worst stock market investment you own and replace it with more of the best stock market investment you own.
The Vikings will begin to play games in a few short weeks. Do you remember when you watched the games last year? It seemed on every play that five to six players came in and out of the game for each team.
The Vikings coaches have to react to the changing game conditions. Down, distance, and field position all constantly change during a football game.
Think of the stock and bond markets as your opposition. At some point, they both are going to work hard to take your recent investment gains away from you.
You are going to have to adapt to a falling stock market and a rising interest rate environment as some point. Just a few weeks ago, both of these events were taking place at the same time.
If the Vikings played the same eleven players on each side of the football for the entire game, they would suffer a lopsided defeat. I you continue to hang on to the same stock and bond market investments that you have owned for many years may suffer the same investment fate.
Ric Lager
Lager & Company, Inc.
