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.
Fool contributor Dan Caplinger owns shares of Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.