Explaining Southern California's economy

Lucky or unlucky Dow 13,000?

Dow Jones Industrial Average Closes Slightly Down

Spencer Platt/Getty Images

U.S. stock markets have been rallying since October. Time to get worried?

The Dow Jones Industrial Average has been bumping along at or just below 13,000 for a few trading days now. As the Wall Street Journal points out, the Dow is up 22 percent since October, an impressive rally given that the economic news, while improving, isn't that good.

So what does it all mean? Well, you could argue for extreme caution at this point. Because the risk-craving money has probably already come into the markets, earning its double-digit returns, it's going to start looking for a way out. Enter the "dumb money," otherwise known as the retail investor. Some analysts think the dumb money has already showed up and is keeping the market elevated.

Regardless, the tail end of a rally can be hard on unseasoned investors. They may panic if they bought high and suddenly see their holdings turn lower as the pros rush back to cash, preparing for the next sustained rally. 

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