The Dow Jones Industrials (DJINDICES:^DJI) soared to new record highs as Janet Yellen, the nominee to replace Ben Bernanke as chair of the Federal Reserve, testified before Congress last week. With expectations of keeping rates low as long as it takes to get the economy on an even keel, should investors expect the bull market to continue indefinitely?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, takes a closer look at Yellen's track record and what it means for investors. Dan notes that the fear of higher rates has hurt homebuilder Pulte Group (NYSE:PHM) and mortgage lenders Wells Fargo (NYSE:WFC) and JPMorgan Chase, but if confidence in the Yellen Fed pushes rates lower, it could reverse much of the damage that has been done to their respective businesses. Bond investments also stand a chance of gaining ground. Dan concludes with implications for leveraged investments such as mortgage REITs Annaly Capital (NYSE:NLY) and American Capital Agency (NASDAQ:AGNC), which have relied on low rates for years to support their high dividends.
Fool contributor Dan Caplinger owns warrants on Wells Fargo and JPMorgan Chase. The Motley Fool recommends Wells Fargo and owns shares of JPMorgan Chase and Wells Fargo. 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.