The S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) climbed through the psychologically important, but otherwise unimportant, level of 5,600 earlier this morning.
Since the beginning of this year, the index has risen 4.4%, excluding today's 0.5% rise. All it would take to hit 6,000 would be a rise 7.1%, from the 5,600 level.
And the way the Commonwealth Bank of Australia (ASX: CBA) share price is going, we could get there a lot sooner! The big bank's shares hit an all-time high of $82.93 earlier today and are up 6.4% since the beginning of the year.
With the top 10 stocks on the ASX representing more than 55% of the index, a strong performance by the big four banks, BHP Billiton Limited (ASX: BHP), Telstra Corporation Ltd (ASX: TLS), Woolworths Limited (ASX: WOW) and Wesfarmers Limited (ASX: WES) could easily push the index over the line.
If you're interested, the big four banks represent just over 30% of the ASX 200 Index value.
In August last year, Bell Potter's Charlie Aitken said he expected the index to hit 6,000 within the next 12 to 18 months. And he based (AFR – subscription required) his forecast on a wall of money leaving cash and fixed interest, and flooding into equities, mainly into the top 20 stocks, which now make up 68% of the market.
Those lower-for-longer term deposit rates and the RBA's forecast of low rates for the foreseeable future mean Mr Aitken is probably right.
But what is concerning is those investors buying the big four banks at these levels. We hope they understand the high risks they are taking, given their leverage to Australia's economy. Even a small downturn could send their earnings crashing, and taking their dividends and share prices with them.
Foolish investors may want to consider looking outside the big four banks, both for growth as well as income. And speaking of which, you might want to check our number one dividend pick for the year ahead…
