US Stocks on Fire, Investors Face Buy-Sell-Hold Dilemma

In the face of a rapidly-rising market typified by another semi-spectacular day in which the Dow set another record close, investors are now faced with the time-worn predicament: Buy, Sell or Hold. Most, judging just by the indices, are holding and buying more, as first quarter corporate earnings reports continue to flow in with satisfying regularity.

One could hardly blame them. The run-ups from mid-March to today (just over 6 weeks): Dow, up 1136 points; NASDAQ, 207 points; S& P 500, 118 points; NYSE Composite, 790 points. These are all in the neighborhood of 8% gains, which normally (whatever normal is these days) would be good for 6 months or a year. Some individual stocks have fared even better.

Impressive, indeed, and still capable of going higher, much higher. Your investment outlook will certainly vary by the length and quality of your experience. Anyone who's been in stocks for the last 20 years can be colored by the deep declines of 1987 and the dot-com collapse of 2000, but also by the spectacular gains of the late nineties - especially 1999 - and this excellent early run since early 2003.

That's where the quality of your experience comes into play. If you were on the right sides of trades in the boom years, you took the declines in stride. Contrary to that perspective would be buying in close to peaks and then being blindsided. Most of us have experienced a share of both sides.

Dow 13,211.88 +75.74; NASDAQ 2,557.84 +26.31; S&P 500 1,495.92 +9.62; NYSE Composite 9,718.00 +78.21

To offer some perspective, while the Dow is at all-time highs, remember it took 6 1/2 years to get to them. The NASDAQ is still off 50% from its all-time high, so there's plenty of room there. And the S & P 500 closed at 1527.46 on March 24, 2000. It's just 30 points from there - an all-time high.

More and more money - much of it created by the Federal Reserve's loose credit policies of 2001-2004 - continues to flow into stocks and there's no indication that it's about to stop. I have to admit to being late to the party, thinking there was going to be a major correction, but that seems more and more a remote possibility.

If you're in this market now, hold and buy more. If you're not already in, it's not even close to being too late. In fact, the next 6-9 months may be exceptional.

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The US economy is still the most stable on the planet when investors look for gains without much risk, they look to the NYSE and the NASDAQ. Stocks are going to continue higher and there's no looking back.

Volume was strong again today, as has been the case of late, and the indices other than the Dow experienced stronger gains, indicating that the Dow's pleasure may be spreading.

The advance-decline line also gives this more credence, as advancing issues outpaced decliners by a 3-1 margin. As well, there were 406 new highs and a paltry 83 new lows, more evidence that this rally could actually be gaining momentum. That is not surprising, as these kinds of things run in cycles. The first phase was getting to the new records on the Dow, and now, phase two, will be longer and more sustained, though probably not as exciting. Nobody is going to forsake 12-15% gains over the next six months, however, which is exactly where this is heading.

Oil prices eased again on Wednesday - the third decline in a row - by 71 cents to close at $63.68. Gold and silver were also lower, though only marginally. Memo to gold bugs: It's time to sell some of your excess and try your hand at stocks.