Commentary: Trepidation about the markets is understandable

Here we sit at market highs.

So why doesn't it feel like it? Why doesn't it feel wonderful and fulfilling and wealth-related?

I can't tell you. You see, for each of us this feeling is a little bit different, the scars heal at a little different rate, the memories fade slower each time we suffer something a little bit uncomfortable.

OK, enough downer comments. What is really going on?

The markets have been on a pretty consistent run since late November, when Investor's Business Daily announced that the market was in a confirmed uptrend. The market started a fairly orderly advance. Not startlingly strong, yet consistent all the same.

The offset is virtually no wage growth, and still many neighbors are out of work. Because, you see, employment, probably one of the most obvious economic indicators, also tends to be one of the most lagging.

All I hear from clients is, "There is nothing that justifies current prices!" Really? Record earnings on many public companies, lowest interest rates in recent history, reasonable valuations, auto sales, recovering economy. Should I continue?

But I must say, this skepticism is quite healthy; I love it. I haven't before seen a time when people are this scared at the top, rather than being upset that they haven't piled in.

Last week, in fact, there was another article in the Wall Street Journal about a barber in New York recommending a tech stock back in the day, and now he is out and absolutely bitter about it.

I believe that there is no better barometer as effective as the stock market, where the big money votes every day its opinion as to whether events are good or bad, to give a true accounting of the economy.

It's easy to question just how the market can be rallying in the face of tepid economic growth and a consumer who is showing some signs of tiring in the face of increased taxes in 2013. But I learned long ago (most recently in 2009) that having even the most well-considered and intellectualized opinion cannot replace simply remaining flexible and being ready to move with fresh market evidence as it arises in real time.

If one seeks a reason for a continued bull phase for this market, consider that the Fed and government have provided a "stimulus" in the form of massive federal spending over the previous five years. Lean companies are starting to be able to grow, ever so slowly, having access to extremely inexpensive capital.

So we are now forced to ask ourselves the elusive question, What now, Mr. Dow?

JOSH YOCAM is a financial advisor with Oppenheimer & Co. Inc. in Newport Beach.

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