Last year was a banner one for the Dow Jones Industrials (DJINDICES:^DJI), which enjoyed their best year since 1995. Yet many are calling for a correction. Will 2014 be a bad year for the Dow, or is the better play to act like a contrarian and bet on further gains?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, provides one reason why the Dow could soar in 2014. Dan notes that calls for a correction seem perfectly reasonable, given huge gains for Boeing (NYSE:BA), American Express (NYSE:AXP), Disney (NYSE:DIS), and other high-profile stocks in the market. Yet when you listen to commentators, most of them appear ready to buy after a correction. Dan notes that investors' willingness to buy dips puts a floor under the market that actually discourages corrections. He suggests that absent negative surprises, you should expect gains to continue until analysts start recommending not waiting for dips to buy. At that point, the floor could go away and the risk of downside moves will increase.
Fool contributor Dan Caplinger owns shares of Walt Disney. The Motley Fool recommends American Express and Walt Disney and owns shares of Walt Disney. 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.