It is easy to see the market rise, and then see this as a reason to hold and not buy. We've been in turbulent times and people are a little hesitant to take risk. However, there are some very strong reasons why the market should continue its climb for quite some time.
Fixed income returns are at extreme lows. If you want to buy a 5 year CD right now, the interest rate will be less than 2%, and US treasuries are even lower. In the coming months as CDs become ready for renewal, many will hesitate before committing to a new 5 year term at less than 2%. Instead many will choose equities where returns could be much higher. An more money gets put in the markets, that means more investment in the economy and continued growth.
And then of course the rental market is very tight right now, and there is need for more housing. There have been increases in building both single family homes and apartments, and that means more jobs.
Speaking of jobs, this week's unemployment report was the lowest in 5 years, before the recession began.
In addition to private hiring, most believe austerity measures by local and state governernments have bottomed. For example, in California there is a deficit, and California is now arguing about how to spend that money, not what to cut.
2013 may be an exciting year for markets, and we finally have some reason to feel confident again!