Dow 14,000: So What?

What does Dow Jones Industrial Average at 14,000 mean?  Not much, when you consider that it's to a large degree the product of the Fed's unremitting money printing policy.  A "value" achieved through government policies, rather than market forces, has little intrinsic value.  Witness the real estate markets of 2007-08:  decades of government subsidies through the mortgage markets, tax laws and Federal Reserve monetary laxity puffed up home values until they exploded in our faces.  Comparable subsidies (like quantitative easing) and more easy Fed money can do the same to financial assets. 

Right now, retail money has started flowing into stocks again.  That's deemed by many market pros to be a sign of an impending market peak.  If you want to get in and out of the market--i.e., trade it as if it were an asset bubble--there may be some greater fools who would buy from you.  That is, if you act quickly enough.  But investor, beware.  The Fed is making an enormous bet right now:  that enough monetary stimulus will somehow revive the economy to the point that it will independently resume sustained growth and return to full employment.  That such will occur is unusually uncertain.  Aside from the fact that economic revival has been painfully slow even with all the printed money, one has the sneaking suspicion that the Fed has quietly placed a side bet that its easy money policy would push down the value of the dollar enough that America might export its way to prosperity.  But other export-centric nations are fighting back.  Japan has effectively undermined the independence of its central bank in order to push the yen down. China has stopped levitating the renminbi. And the Germans are starting to grouse audibly about the revival of the Euro.  Currency wars tend to take on the look and feel of a circular firing squad, and the major economies of the world are charging their muskets.