The Herald Bulletin

Afternoon Update

Local Business

March 9, 2013

'Big Joe' Clark: What to consider when the market hits new highs

The band Styx declared it the best of times in 1981. The equity and bond markets have seen both the best and the worst of times over the last 32 years. This week the headlines read new highs for the Dow Jones Industrial Average. Happy Day and happy headlines, but what does it mean and where to from here?

There are two emotions that drive the markets – fear and greed.  Fear will always trump greed in the end but right now there is little fear in sight. Retail investors typically put more money in the markets at high points and tend to pull out money after major corrections, largely due to the above mentioned emotions. When you can’t wrap your arms around a physical object – like a sweater at a department store – it is hard to put more money in the market when the price falls everyday.  You would gladly buy a sweater that you liked for $50 for a price of $35 but it is because you can see it, feel it and understand it.  Investments are more abstract.

The broad market indices have been on a tear for 2013 and the Dow Jones hit a new high on Tuesday. That’s exciting and a great headline but understand since the last high was made a few changes have taken place. In early 2008 Altria and Honeywell were replaced by Chevron and Bank of America. After the financial collapse in 2008 was in full form AIG was replaced by Kraft. Citi and General Motors got the boot in 2009 and Travelers Insurance and Cisco were added. Last year Kraft was removed and United Healthcare was added! Remember the Dow is an index of stocks with more than 45 changes it 116 year history.

Under the hood we find a concerning if not troubling issue. In economics we often use the words elastic and inelastic.  Think rubber bands.  They are very elastic meaning they can move around and change based on the tension or pressure applied to them.  Things that are inelastic can’t change very much. Food for instance is considered to be inelastic as you need to eat even if you are unemployed while the number of times you may eat at an expensive restaurant or shopping at a high end retailer could clearly change if your financial situation changed.

Typically when equity markets reach new highs the top performing stocks tend to be the elastic-type sectors of our economy. Currently we find that healthcare and consumer staples are actually leading the way in 2013 while materials and technology are the laggards. Simply put, that’s just not normal but then again neither is it normal for the Federal Reserve to put $85 billion a month into the financial system!

We live in interesting times full of economic and political disruptions and distortions. Things that normally work on the investment front are finding challenges. Is it temporary or are the distortions and ripples in the markets here to stay. Stay tuned! Regardless of which answer you chose or the inevitable outcome, the market will respond.

Joseph “Big Joe” Clark, whose column is published Sundays, is a certified financial planner. He can be reached at or 640-1524.

Text Only
Local Business
  • NWS - HB0715 - Chuck Pagano Pagano breakfast sold out A breakfast with Indianapolis Colts head coach Chuck Pagano is sold out, organizers said Wednesday.

    July 23, 2014 1 Photo

  • Cellular Connection to host backpack giveaway Residents in Anderson will benefit from a national backpack giveaway campaign on Aug. 2.

    July 23, 2014

  • Travel restrictions on Interstate 69 this weekend During at least the next eight weekends, travel north of Anderson on Interstate 69 will be restricted as damaged concrete is repaired.

    July 22, 2014

  • Senior housing request continued A request for final plat approval for a senior housing development on property near Madison Park Church of God was continued Tuesday. The Anderson Plan Commission could not consider the request because of a lack of a quorum to conduct business.

    July 22, 2014

  • Street Department purchases 2 pickup trucks The Anderson Street Department received approval to buy two Dodge Ram pickup trucks on Tuesday.

    July 22, 2014

  • FEA - HB0722 - SAVI - 1 Staying strong during adversity

    When doctors told Judy Best she had cancer she was shocked, but she never lost hope.

    July 22, 2014 2 Photos

  • NWS - HB0721 - 4-H parade 3 - DH Scholarship recipients relish parade acknowledgement

    Taylor Jennings and Shelby Farmer took their last stroll around their hometown Sunday. At least, their last before starting college in the fall.

    July 20, 2014 5 Photos

  • Senior housing sought for Madison Park A senior housing development proposed almost six months ago for the Madison Park Church of God property is now moving forward.

    July 20, 2014

  • Wilkerson, Jesse mug Jesse Wilkerson: Unplug to reconnect I am inspired and influenced by people in our community who are creating a legacy of service. These people have disconnected long enough to realize there is more to their life than their job or personal success.

    July 20, 2014 1 Photo

  • BIZ-HB0720-Coldbeer-TM.jpg Brouhaha over cold beer

    Warm beer lines the shelves inside the Ricker’s BP on Eighth Street less than a foot from a refrigerated section, but the convenience store is not planning to move the beer anytime soon. That’s because a state law prohibits Ricker’s from selling cold beer to customers.

    July 19, 2014 1 Photo

Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide