Market's Rally Keeping Gains, Steadily Rising

The market has continued on the road to 10,000 without any huge speed bumps. It not unusual to see such a huge rally after a bear market. What we haven't seen yet is part 2: the decent back into the pit. Earnings and outlooks have been the main driver of this rally so far. Economic news has been both positive and negative giving the market a little indecision at times. The start of earnings season has straightened the course out yet again.

It is important to stress that our economy is not back to what it was. Unemployment is still rising, foreclosures are heavily apparent, and consumers are hesitant to spend. The ability for companies to say the economy is getting better has propelled the market further. The only problem lies with the fact that once expectations get too high, any missed target can put an abrupt halt to the rally. Sure, it should be easier to beat year over year earnings since Q4 and Q1 were nothing short of disastrous. If expectations get too high too fast, it just remind investors that economic conditions are not all that great yet. A single mistake by the Fed could put us right back into the recession that we supposedly climbed out of.

My question then becomes, "What should we invest in?" Growth stocks have been essential to get back where we were a year and a half ago. When do we go back to being a little conservative and put some staples back into the portfolio? I think now is a good time to slowly put a couple back into the portfolio to smooth out the beta a little bit until we see, not just positive economic news but, sustainable economic news. Using conservatism to make cash money has never hurt anybody. Just look at Warren Buffett.