As stocks rise, so does anxiety: Time to get out?: Associated Press Business News - MSN Money
This is an excellent article which presents the bull and bear cases for stocks. On the bull side, there is nothing significant that could bring stocks down. The economy is getting stronger, not weaker. The S&P 500 is expected to grow earnings 8% in 2014 and 12% in 2015. So, earnings are not topped out like some people thought.
In addition, interest rates are low, and the old saying goes that stocks will "grow" under those conditions. Both individuals and businesses can expand with low interest money, and bonds are not attractive with low interest rates. One analyst said that the last seven bull markets did not end until interest rates were higher than 4%. We are nowhere near that scenario now. Thus, we need to make money while we can by being mostly long.
On the bear side, it is definitely true that stocks are overvalued. It is also well known that the Federal Reserve will eventually raise interest rates. Because of these conditions, long term bonds are being bought since many believe we are near a stock market top. We have the unusual scenario that stocks and bonds are rising together because separate groups are buying their favorite assets. I own 20% bonds myself in TMF and TLT, and I am making money on bonds as well as stocks.
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