The Market, She Be Toppy?

I've been giving this sort of anthropomorphic type of analyst drivel a lot of thought recently.

Not that I believe markets are 'alive,' or have an inherent, intrinsic life force. But I do observe patterns.

Right now, despite the fact that the Dow and S&P are at record highs, I do not think investors have driven them to frothy, unsustainable levels. Rather, given the S&P500 Index returns of the past few years, I think what we are witnessing is very sustainable.

For instance, unlike the late '90s, when the index had a string of not just double-digit returns, but a string of annual returns above 20%, this is not the case currently.

The average for the last four years may not even be above the long-term S&P annual average return of 11%. And prior to that, we had the two years of a market bubble bursting, which sent the index down in the 40 percentage point range over two years.

Thus, I don't see this recent rise in equity values particularly worrisome. It seems to me rather overdue, as good global growth and low inflation are finally being acknowledged by US market investors.

For all the hand-wringing over inflation, it's way, way below the levels of the 1970s. Sub-prime woes represent a rather small sliver of asset values, amidst the total American capital markets. Large-cap US companies are thriving across the globe in various growth markets.

If anything, equity values may be too low. But, right now, I would venture to say they are not too high.

So, as my partner and I continue to implement our monthly options variant of our basic equity strategy, I expect consistently good returns due to superior selections in a growth environment, for at least the rest of this year. Barring things like significant terrorist acts which disrupt global trade or its underpinnings.