Yet we remain convinced that the law of gravity, if not human nature, still applies. We are optimistic about the economy, but nervous about the market. The U.S. economy is in good condition. Economic growth is strong, but not yet strong enough to warrant any significant tightening in rates by the Federal Reserve. Unemployment rates are at their lowest levels since 1973, and corporate profitability levels remain high, largely because of continued improvements in productivity.
Inflation rates are low, and interest rates are modest.
The dollar is strong, and American businesses are highly competitive in the global economy. We are technologically advanced, lean, mean, flexible and dynamic. It is the sum total of all of these factors that forms the belief system that has fueled the market's rise. But the skies are not cloudless. This is not to say that we are out looking for bad news, but when the good news is already so well known, a little circumspection doesn't hurt.