Risk Management, Trading & Portfolio Strategies

Retail investors nervous about a possible bubble

Are we in a retail bubble?

Are we in a retail bubble?

As both the Dow and NASDAQ have reached historic highs recently, traders – especially those heavily invested in retail – are beginning to worry that today's high stock prices may not necessarily be a good thing. Many have begun to speculate how much higher the market can possibly go, and whether or not it is time to sell. 

Irwin Kellner, MarketWatch's chief economist, recently weighed in on the discussion in his column. 

"You can't blame people for being cautious," Kellner wrote. "From its low point in March 2009, the Dow Jones Industrial Average has more than doubled – it has jumped more than 22 percent this year alone. By contrast, the economy has barely grown by 10 percent during this entire time." 

He also added that consumer confidence is currently at a seven-month low and the unemployment rate is still above 7 percent. As we enter the retail industry's busiest and most important time of the year, one cannot help but be concerned about how businesses can make money when consumers have such low buying power. In addition, there is little inflation to boost sales and earnings numbers. 

Kellner notes that if and when the next market crisis arrives, traders worry that the big banks won't help the federal government bail out smaller, struggling companies, once again leaving the individual investor on the hook for corporations' irresponsible behaviors. 

With such market volatility, it is essential that individual investors take an active approach in managing their stocks. An important component of this process is being informed about market changes as they happen. With SmartStops' investment analysis and portfolio management software, you can more diligently protect your funds. 

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