Stock Market 2014: How Much Higher Can Stocks Soar?

The stock market has soared in 2013, making many investors rich. Yet some are worried that the stock market in 2014 might not be as kind. Are calls for the Dow Jones Industrials (DJINDICES: ^DJI  ) to keep hitting new record highs and for the S&P 500 (SNPINDEX: ^GSPC  ) to hit the 2,000 level irrationally exuberant, or do they make sense?

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at one reason why stocks could head much higher even from current levels. Dan notes that when you consider inflation, the S&P 500 hasn't yet recovered to its highest levels more than 13 years ago. On an inflation-adjusted basis, the record highs from that era were around 1,979, giving the S&P almost 10% upside from current levels. Dan warns, however, that index levels also don't take dividends into account, explaining the impact that ExxonMobil (NYSE: XOM  ) , Apple (NASDAQ: AAPL  ) , and AT&T (NYSE: T  ) have when they make their massive dividend payments. With the market in full rally mode, Dan concludes that further gains definitely aren't out of the question for the stock market in 2014.

Don't be afraid
Even as stocks soar, it still makes sense to stay invested in the stock market in 2014. The said fact is that those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.


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