If anybody is still clinging to the view that the rally in domestic stocks since the bear market bottom has been fueled entirely by "easy money" from the Fed, this view is being dealt a crushing blow today as stocks rally to new highs in response to hawkish (higher interest rate) talk from a couple of influential members of the Federal Reserve. While interest rates do play a role in how stocks are valued, I have argued for some time that higher earnings have justified the rise in prices. While the rally since the election has seemed overdue for what I would expect to be a short-term correction, stocks are having nothing to do with it. Stocks have a habit of not only surprising to the downside, but the upside as well. All the more reason not to try to time the markets due to short-term expectations.

Glenn S. Rank, CIMA®

Certified Investment Management Analyst®

President