Local economist weighs in on recent stock market surge

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by JIM BERGAMO / KVUE News and Photojournalist Dennis Thomas

Bio | Email | Follow: @JimB_KVUE

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Posted on November 18, 2013 at 7:19 PM

Updated Monday, Nov 18 at 7:20 PM

AUSTIN -- As the stock markets continue to soar, what's the best course of action to take? Jump in head first in the deep end of the financial pool, or dip your toes in the shallow waters to gauge the temperature?

President and Chief Economist of Prestige Economics Jason Schenker offered his opinion to KVUE.

There's no mistaking the joy on Wall Street as the stock markets continue to soar.
 
"The U.S. economy has been gradually improving since the last recession," said Schenker.

He cautions the rapid rise in equities is tied to the federal stimulus.

"Everything feels really good right now, and everyone feels really smart," he said. "But it's a bit like an amusement park ride. At some point the fed will taper, and if you stay on the ride a bit too long you could end up feeling really sick."

How do you know when to get on or off the ride?

"I would caution investors right now not to change their investing pattern," said Schenker.  

That's because he says the fed will definitely decrease the stimulus next year. It's something it only talked about doing this year, yet it triggered a sharp drop in stocks and higher mortgage rates.

"It's not that we're at the top," he said. "The top is hard to call, but we could be getting close.  Therefore it might not be the time to change your strategy and plow in to financial markets. Because why would you plow into financial markets as the feds are backing out?"

Schenker says other factors like the increasing cost of the Affordable Care Act and next year's national debt ceiling showdown could also negatively impact the markets.

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